Assume that when Diligent and Flake had incorporated, they created a shareholders' agreement as follows.

Annual SalaryDiligent, $15,000; Flake, $10,000

Annual dividend of $0.10 per share to be paid on March 31

Accounting for Corporations

The income statement for the year ended March 31, 2015 is provided below.

Diligent and Flake Landscaping, Inc.

Income Statement

Year ended March 31,2014

Landscaping revenue$65,000

Operating expenses

Supplies expenses$15,00

Depreciation expenses $4,000

Salaries expenses$25,000($44,000)

Profit before income tax$21,000

Income tax expense$4,200($4,200)

Profit $16,800

On March 31, 2015 dividends were declared and paid in accordance with the shareholders' agreement.

Required:

1. Prepare the journal entry to record the dividend.
2. Prepare entries to close the income summary and the dividend accounts.
3. Create a T-account for retained earnings and post the closing entries.