Question

requirement 4. no preferred dividends are in arrears. journalize the declaration of a $300,000 dividend at june 30, 2025, and the payment of the dividend on july 20, 2025. use separate dividends payable accounts for preferred and common stock. an explanation is not required. (record debits first, then credits. exclude explanations from any journal entries.)
begin by recording the declaration of a $300,000 dividend at june 30, 2025
partial balance sheet
stockholders equity
paid - in capital
preferred stock - 7%, ? par value, 675,000 shares authorized, 375,000 shares issued and outstanding $ 1,500,000
common stock - $1 par value, 10,000,000 shares authorized, 1,420,000 shares issued and outstanding 1,420,000
paid - in capital in excess of par - common 2,700,000
total paid - in capital 5,620,000
retained earnings 11,800,000
total stockholders equity $ 17,420,000

Explanation:

Step1: Calculate preferred dividend

Preferred dividend = Preferred stock amount × Dividend rate
Preferred stock amount = $1,500,000$, Dividend rate = 7%
Preferred dividend = $1,500,000\times0.07=\$105,000$

Step2: Calculate common dividend

Common dividend = Total dividend - Preferred dividend
Total dividend = $300,000$, Preferred dividend = $105,000$
Common dividend = $300,000 - 105,000=\$195,000$

Step3: Journal entry for dividend declaration (June 30, 2025)

Debit Retained Earnings (total dividend amount) $300,000$
Credit Dividends Payable—Preferred $105,000$
Credit Dividends Payable—Common $195,000$

Step4: Journal entry for dividend payment (July 20, 2025)

Debit Dividends Payable—Preferred $105,000$
Debit Dividends Payable—Common $195,000$
Credit Cash $300,000$

Answer:

For June 30, 2025:

Date	Accounts	Debit	Credit
	Dividends Payable—Preferred		$105,000
	Dividends Payable—Common		$195,000

For July 20, 2025:

Date	Accounts	Debit	Credit
	Dividends Payable—Common	$195,000
	Cash		$300,000