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Bogscraft Company has outstanding 64,000 shares of [tex] \$10 [/tex] par value common stock and 25,800 shares of [tex] \$20 [/tex] par value preferred stock (8 percent). On February 1, the board of directors voted in favor of an 8 percent cash dividend on the preferred stock. The cash dividends were paid on March 15. The company closed its books at its fiscal year-end, June 30.

Required:
Prepare journal entries to record the events on:
a. February 1,
b. March 15, and
c. June 30.

Note: If no entry is required for a transaction or event, select "No Journal Entry Required" in the first account field.

Journal Entry Worksheet

1. Record the declaration of a cash dividend of 8 percent to the 25,800 shares of [tex] \$20 [/tex] par value preferred stock outstanding.

[tex]\[
\begin{tabular}{|c|c|c|c|}
\hline
\text{Date} & \text{General Journal} & \text{Debit} & \text{Credit} \\
\hline
\text{February 01} & & & \\
\hline
& & & \\
\hline
& & & \\
\hline
& & & \\
\hline
& & & \\
\hline
& & & \\
\hline
\end{tabular}
\][/tex]

Note: Enter debits before credits.



Answer :

GinnyAnswer
To prepare the journal entries for the given transactions, follow these steps:

a. February 1: Declaration of Dividends

On this date, the company declares a cash dividend of 8 percent on the preferred stock. Here's how you would record that:

1. Calculate the total dividend amount for the preferred shares:
- Preferred shares = 25,800
- Par value per preferred share = [tex]$20 - Dividend rate = 8% Total dividend amount = 25,800 shares $[/tex]20 8%
Total dividend amount = 25,800 20 0.08 = [tex]$41,280.00 2. Journal Entry: - Debit: Dividends Declared $[/tex]41,280.00
- Credit: Dividends Payable [tex]$41,280.00 \[ \begin{tabular}{|c|l|r|r|} \hline \textbf{Date} & \textbf{Account Title} & \textbf{Debit} & \textbf{Credit} \\ \hline February 01 & Dividends Declared & 41,280.00 & \\ \hline & Dividends Payable & & 41,280.00 \\ \hline \end{tabular} \] b. March 15: Payment of Dividends On this date, the company pays the declared dividends. Here's how you would record that: 1. Journal Entry: - Debit: Dividends Payable $[/tex]41,280.00
- Credit: Cash $41,280.00

[tex]\[ \begin{tabular}{|c|l|r|r|} \hline \textbf{Date} & \textbf{Account Title} & \textbf{Debit} & \textbf{Credit} \\ \hline March 15 & Dividends Payable & 41,280.00 & \\ \hline & Cash & & 41,280.00 \\ \hline \end{tabular} \][/tex]

c. June 30: Closing the Books

Since the problem specifies no particular transactions on June 30 related to the dividends, you would not need to make a specific journal entry for the dividends on this date. Therefore:

- No Journal Entry Required

Summarizing the journal entries:

[tex]\[ \begin{tabular}{|c|l|r|r|} \hline \textbf{Date} & \textbf{Account Title} & \textbf{Debit} & \textbf{Credit} \\ \hline February 01 & Dividends Declared & 41,280.00 & \\ \hline & Dividends Payable & & 41,280.00 \\ \hline March 15 & Dividends Payable & 41,280.00 & \\ \hline & Cash & & 41,280.00 \\ \hline June 30 & No Journal Entry Required & & \\ \hline \end{tabular} \][/tex]

This completes the required journal entries for Bogscraft Company based on the provided information.

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