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Closing and Dividend Entries

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Columbia Coffee Company earned net income of $85,000 during the year ended December 31, 20x8. On December 15, Columbia declared the annual cash dividend on its 6% preferred stock (10,000 shares with a $10 par value) and a $0.50 per share cash dividend on its common stock (50,000 shares with a $5 par value). Columbia then paid the dividends on January 4, 20x9.

Jouralize for Columbia Coffee Company, the following transactions:

a. Declaring the cash dividends on December 15, 20x8

b. Closing net income to Retained Earnings on December 31, 20x8

c. Paying the cash dividends on January 4, 20x9

Please show calculations.

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Solution Summary

Given a set of transactions, this solution illustrates how to journalize the closing of the year's net income and dividends declared and paid.

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