Sweet Dreams Chocolatiers Ltd. began operations on January 1, 2016. During its first year, the...

Question:

Sweet Dreams Chocolatiers Ltd. began operations on January 1, 2016. During its first year, the following transactions occurred:

1. Issued common shares for $200,000 cash.

2. Purchased $475,000 of inventory on account.

3. Sold inventory on account for $640,000. The original cost of the inventory that was sold was $380,000.

4. Collected $580,000 from customers on account.

5. Paid $430,000 to suppliers for the inventory previously purchased on account.

6. Bought a delivery vehicle for $36,000 cash.

7. Paid $26,000 for rent, including $2,000 related to the next year.

8. Incurred $20,000 of operating expenses, of which $18,000 was paid.

9. Recorded $2,000 of depreciation on the vehicle.

10. Declared and paid dividends of $6,000.

Required:

Prepare journal entries to record each of the above transactions.

Cash Dividend:

There are 3 dates that are important in the case of cash dividends. The dividend-declared date is the date at which the company declared the dividend. The dividend record date is the date at which a company checks its records for eligible shareholders. The dividend payment date is the date at which the dividend is paid to the shareholders.

Answer and Explanation: 1

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The journal entries to record each of the transactions are shown below.

Sr. No.ParticularsDebit ($)Credit ($)
1 Cash200,000
To share capital 200,...

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Cash Dividends & Dividend Payment

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Chapter 16 / Lesson 1
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Dividends are incentives in the form of payments to shareholders of a company. Explore the different types of dividends and the standard method of payments that they occur in.


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