Explanation Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. Journalize the given transactions in the books of Company B . Transaction on April 15: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 April 15 Income Tax Expense 7,500 Cash 7,500 (Record payment of income tax expense) Table (1) Description: Income Tax Expense is an expense account. Since losses and expenses decrease equity and a decrease in equity is debited, debit Income Tax Expense account. Cash is an asset account. Since cash is paid, asset value decreased, and a decrease in asset is credited. Transaction on April 25: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 April 25 Cash Dividends 36,000 Common Dividends Payable 36,000 (Record declaration of common dividends) Table (2) Description: Cash Dividends is a contra-capital temporary account. This account decreases stockholders’ equity and is closed as the dividends are paid off. So, the account is debited. Common Dividends Payable is a liability account. Since the liability to pay dividends increased, liability increased, and an increase in liability is credited. Working Notes: Compute amount of common dividends declared . Dividend declared = Number of shares ×Dividend per share = 80,000 shares ×$0 .45 = $36,000 (1) Transaction on May 20: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 May 20 Common Dividends Payable 36,000 Cash 36,000 (Record payment of common dividends) Table (3) Description: Common Dividends Payable is a liability account. Since the liability to pay dividends has been paid off, liability decreased, and a decrease in liability is debited. Cash is an asset account. The amount is decreased because cash is paid as dividends, and a decrease in assets should be credited. Note: Refer to Equation (1) for the value and computation common dividends. Transaction on June 15: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 June 15 Income Tax Expense 7,500 Cash 7,500 (Record payment of income tax expense) Table (4) Description: Income Tax Expense is an expense account. Since losses and expenses decrease equity and a decrease in equity is debited, debit Income Tax Expense account. Cash is an asset account. Since cash is paid, asset value decreased, and a decrease in asset is credited. Transaction on September 15: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 September 15 Income Tax Expense 7,500 Cash 7,500 (Record payment of income tax expense) Table (5) Description: Income Tax Expense is an expense account. Since losses and expenses decrease equity and a decrease in equity is debited, debit Income Tax Expense account. Cash is an asset account. Since cash is paid, asset value decreased, and a decrease in asset is credited. Transaction on October 25: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 October 25 Cash Dividends 36,000 Common Dividends Payable 36,000 (Record declaration of common dividends) Table (6) Description: Cash Dividends is a contra-capital temporary account

23rd Edition

ISBN: 9780357421123

Author: HEINTZ

Publisher: Cengage Learning

See similar textbooks

Concept explainers

Control Systems

Before we can answer this question, let us understand what a system is? A system is a set of objects placed together to complete a specific task. When stimulated by a machine with an input, a particular response is obtained.

PID Controller

PID (Proportional Integrator Derivative) the controller is an instrument used to regulate the temperature, pressure, flow, speed, and other process parameters in the industry. It uses a closed-loop feedback system to regulate control parameters to achiev…

Question

Chapter 21, Problem 8SPA

To determine

Journalize the given transactions in the books of Company B.

Expert Solution & Answer

Chapter 21 Solutions

EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL

Ch. 21 - Income taxes are a unique expense of the corporate...Ch. 21 - Prob. 2TF Ch. 21 - Prob. 3TF Ch. 21 - Prob. 4TF Ch. 21 - Prob. 5TF Ch. 21 - Prob. 1MC Ch. 21 - Prob. 2MC Ch. 21 - Prob. 3MC Ch. 21 - Prob. 4MC Ch. 21 - Prob. 5MC

Ch. 21 - Prob. 1CE Ch. 21 - Prob. 2CE Ch. 21 - Teway Company declared and paid dividends in the...Ch. 21 - Prob. 4CE Ch. 21 - Prob. 5CE Ch. 21 - Prob. 1RQ Ch. 21 - Prob. 2RQ Ch. 21 - Prob. 3RQ Ch. 21 - Prob. 4RQ Ch. 21 - Prob. 5RQ Ch. 21 - Prob. 6RQ Ch. 21 - Prob. 7RQ Ch. 21 - Prob. 8RQ Ch. 21 - Prob. 9RQ Ch. 21 - Prob. 10RQ Ch. 21 - Prob. 11RQ Ch. 21 - CORPORATE INCOME TAX Stanton Company estimates...Ch. 21 - CLOSING INCOME SUMMARY AND DIVIDENDS TO RETAINED...Ch. 21 - Prob. 3SEA Ch. 21 - STOCK DIVIDENDS Kaufman Company currently has...Ch. 21 - STOCK SPLIT Goldstein Company has 100,000 shares...Ch. 21 - Prob. 6SEA Ch. 21 - STATEMENT OF RETAINED EARNINGS McGregor Company...Ch. 21 - Prob. 8SPA Ch. 21 - Prob. 9SPA Ch. 21 - Prob. 10SPA Ch. 21 - Prob. 11SPA Ch. 21 - Prob. 1SEB Ch. 21 - CLOSING INCOME SUMMARY AND DIVIDENDS TO RETAINED...Ch. 21 - COMMON AND PREFERRED CASH DIVIDENDS Ramirez...Ch. 21 - STOCK DIVIDENDS Martinez Company currently has...Ch. 21 - Prob. 5SEB Ch. 21 - Prob. 6SEB Ch. 21 - Prob. 7SEB Ch. 21 - Prob. 8SPB Ch. 21 - CASH DIVIDENDS, STOCK DIVIDEND, AND STOCK SPLIT...Ch. 21 - Prob. 10SPB Ch. 21 - Prob. 11SPB Ch. 21 - Prob. 1MYW Ch. 21 - Prob. 1EC Ch. 21 - MASTRY PROBLEM On January 1, 20--, Dover Companys...Ch. 21 - CHALLENGE PROBLEM This problem challenges you to...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:9780357391266
Author:Nellen
Publisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning