Question

On November​ 1, 2024,​ Nada, Inc. declared a dividend of $ 3.25 per share on common stock.​ Nada, Inc. has 27000 shares of common stock outstanding and no preferred stock. The date of record is November​ 15, and the payment date is November​ 30, 2024. Which of the following is the journal entry needed on November​ 30, 2024?
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Part 1
A.
Debit Cash Dividends $ 87 comma 750​, and credit Cash $ 87 comma 750.
B.
Debit Dividends Payablelong dashCommon $ 87 comma 750​, and credit Cash $ 87 comma 750.
C.
Debit Cash Dividends $ 87 comma 750​, and credit Dividends Payablelong dashCommon $ 87 comma 750.
D.
Debit Cash $ 87 comma 750​, and credit Dividends Payablelong dashCommon $ 87 comma 750.

Answer 1

To determine the correct journal entry for the payment of dividends on November 30, 2024, we need to calculate the total amount of dividends to be paid:

- Number of shares: 27,000 shares
- Dividend per share: $3.25

Total dividends = 27,000 shares × $3.25 per share = $87,750

On the payment date (November 30, 2024), the company will pay the recorded dividends, which were previously declared and recorded as a liability (Dividends Payable) when the dividend was declared. Therefore, the correct journal entry to record the payment of dividends will be:

- Debit Dividends Payable for the total dividends amount (to reduce the liability)
- Credit Cash for the same amount (to reflect the outflow of cash)

Thus, the correct option is:

**B. Debit Dividends Payable - Common $87,750, and credit Cash $87,750.**