Question

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april 1: declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. on the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding.
record the transaction in the general journal.

Explanation:

Step1: Calculate the total dividend for common stock

The formula for calculating the total dividend for common stock is \( \text{Total dividend for common stock}=\text{Dividend per share}\times\text{Number of shares} \).
Given that the dividend per share for common stock is \( \$0.50 \) and the number of shares is \( 100,000 \), we have \( 0.50\times100000 = 50000 \).

Step2: Calculate the total dividend for preferred stock

The formula for calculating the total dividend for preferred stock is \( \text{Total dividend for preferred stock}=\text{Dividend per share}\times\text{Number of shares} \).
Given that the dividend per share for preferred stock is \( \$1.00 \) and the number of shares is \( 20,000 \), we have \( 1\times20000=20000 \).

Step3: Determine the total dividend

The total dividend is the sum of the dividend for common stock and preferred stock. So, \( 50000 + 20000=70000 \).

Step4: Record the journal entry

When a dividend is declared, we debit the Retained Earnings (or Dividends Declared, depending on the company's accounting policy) and credit the Dividends Payable.
The journal entry is:

Date	Account Titles and Explanation	Debit	Credit
	Dividends Payable - Common Stock		\( 50000 \)
	Dividends Payable - Preferred Stock		\( 20000 \)

Answer:

The journal entry is as shown in Step4.