Chapter 14, Problem 1E

(a)

To determine

Cash Dividend: The amount that shareholders receive in cash in return of their investment is called as cash dividend. Company provides return to its shareholders by paying dividend which is out of profit of the company.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

• To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: The journal entries.

(b)

To determine

The reporting of dividends payable in financial statements.