7. Help me selecting the right answer. Thank you Fancy Clothing Company is authorized to issue 110,000 shares of $2 par common stock. The company issued 5,100 shares at $6 per share, when the market price of the common stock was $10 per share. Later, Charter declared and paid a $0.50 per share cash dividend. The journal entry to declare the cash dividend would be:- Cash Dividends 2,550 - Dividends Payable - Common 2,550Explanation of Options:1. **Dividends Payable - Common 55,000** - **Cash Dividends 55,000**2. **Dividends Payable - Common 2,550** - **Cash Dividends 2,550**3. **Cash Dividends 55,000** - **Dividends Payable - Common 55,000**4. **Cash Dividends 2,550** - **Dividends Payable - Common 2,550**The correct option is the fourth one, which shows the declaration of a cash dividend as debiting "Cash Dividends" and crediting "Dividends Payable - Common" for $2,550. This reflects the company's obligation to pay dividends to shareholders.

Given in the question: Authorized Number of Shares 110000 Par Value of Common Stock $2…

Fancy Clothing Company is authorized to issue 110,000 shares of $2 par common stock. The company issued 5,100 shares at $6 per share, when the market price of the common stock was $10 per share. Later, Charter declared and paid a $0.50 per share cash dividend. The journal entry to declare the cash dividend would be:

Fancy Clothing Company is authorized to issue 110,000 shares of $2 par common stock. The company issued 5,100 shares at $6 per share, when the market price of the common stock was $10 per share. Later, Charter declared and paid a $0.50 per share cash dividend. The journal entry to declare the cash dividend would be:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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