Question

hazelnut company earned net income of $82,000 during the year ended december 31, 2025. on december 15, hazelnut company declared the annual cash dividend on its 3% preferred stock (par value, $135,000) and a $0.70 per share cash dividend on its common stock (48,000 shares). hazelnut company then paid the dividends on january 4, 2026.
requirements

1. journalize for hazelnut company the entry declaring the cash dividends on december 15, 2025.
2. journalize for hazelnut company the entry paying the cash dividends on january 4, 2026.

requirement 1. journalize for hazelnut company the entry declaring the cash dividends on december 15, 2025. (record debits first, then credits. select the explanation on the last line of the journal entry table.)

requirement 2. journalize for hazelnut company the entry paying the cash dividends on january 4, 2026. (record debits first, then credits. select the explanation on the last line of the journal entry table.)

Explanation:

Step1: Calculate preferred stock dividend

Preferred stock par value = $135,000. Dividend rate = 3%.
Preferred stock dividend = $135,000×3% = $4,050.

Step2: Calculate common stock dividend

Common stock shares = 48,000. Dividend per share = $0.70.
Common stock dividend = 48,000×$0.70 = $33,600.

Step3: Journal entry for payment of dividends

When dividends are paid, we debit the dividends payable accounts (to reduce the liability) and credit the cash account (to show the outflow of cash).

Answer:

Date	Accounts and Explanation	Debit	Credit
	Dividends Payable—Common	33,600
	Cash		37,650
	(Paid the declared cash dividends)