CASH DIVIDENDS AND INCOME TAXES During the year ended December 31, 20-2, Tatu Company completed the following

Question:

CASH DIVIDENDS AND INCOME TAXES During the year ended December 31, 20-2, Tatu Company completed the following selected transactions:

Apr. 15 Estimated that its 20-2 income tax will be $160,000. Based on this estimate, it will make four quarterly payments of $40,000 each on April 15, June 15, September 15, and December 15. Made the first payment.

25 Declared a semiannual dividend of $0.50 per share on common stock to shareholders of record on May 10, payable May 20. Currently, 90,000 shares of $1 par common stock are outstanding.

May 20 Paid the cash dividends.

June 15 Made estimated tax payment of $40,000.

Sept. 15 Made estimated tax payment of $40,000.

Oct. 25 Declared semiannual dividend of $0.50 per share on common stock to shareholders of record on November 10, payable on November 20.

Nov. 20 Paid the cash dividends.

Dec. 15 Made estimated tax payment of $40,000.

31 Tatu’s actual 20-2 income tax amounts to $174,000. This amount will be paid by March 15, 20-3. Made adjustment for the additional amount owed.

31 Net income for 20-2 was $196,000. Closed the income summary account.

31 Closed the cash dividends account.

REQUIRED

Prepare journal entries for the transactions.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...