Answer:
See explanation section
Explanation:
Dividend declaration date = August 1. The journal entry is as follows:
Debit Retained Earnings $6,200,000
Credit Dividends payable $6,200,000
Calculation: $1.55 per share × 4,000,000 outstanding shares = $6,200,000
As the dividend is declared, there is no cash paid. So, cash is not either debit or credit. As the company does not pay the dividends, a liability account will open.
Dividend record date = August 15. There will be no journal entry required.
Dividend payment date = September 9. The journal entry is as follows:
Debit Dividends payable $6,200,000
Credit Cash $6,200,000
As soon as the cash dividend is paid, cash becomes credit because of the payment of dividends. The liability decreases after paying the stockholders'.
