OPQ company was authorized to issue 100,000 common stocks with $10 par value. During the year xxx1, issued 30,000 shares for $15 market value. On December 1, xxx1, declared cash dividends for $2 per share to be paid on December 30, to registered stockholders as of December 15.

21. When the company declared dividends, how this event will affect the accounting equation (Financial Statementshorizontal)?

a) Increase Dividends Payable and decrease Retained Earnings by $60,000.

b) Increase Dividends Payable and decrease Retained Earnings by $6,000.

c) Increase Dividends Payable and decrease Retained Earnings by $200,000.

You MUST show your calculations:

22. When the company registered dividends based on the date, how this event will affect the accounting equation (Financial Statements-horizontal)?

a) Increase Dividends Payable and decrease Retained Earnings by $60,000.

b) Increase Dividends Payable and decrease Retained Earnings by $6,000.

c) There is no effect because it had no impact either on assets, liabilities or capital. The cash flow will not be affected.

You MUST show your calculations: