Cash Dividends Rock Corporation has the following shares outstanding: 8,000 shares of $40 par value, ten percent preferred stock and 50,000 shares of $2 par value common stock. The company has $428,000 of retained earnings. At year-end, the company declares its regular $4 per share cash dividend on the preferred stock and a $3.20 per share cash dividend on the common stock. Two weeks later, the company pays the dividends.

a. Prepare the journal entry for the declaration of the cash dividends.

b. Prepare the journal entry for the payment of the cash dividends.

A.

Cash Dividends Debit _______ Credit ______ Dividends payable-Preferred Stock Debit _________ Crdit ________ Dividends Payable-Common Stock Debit _________- Credit ________ To record declaration of cash dividends. B. Dividends payable-Preferred stock Debit _________ Credit ________ Dividends payable-Common Stock Debit_________ Credit _________ Cash Debit _________ Credit _________ To record payment of dividends.