Kate decides to issue cash dividends on both the common stock and the preferred stock. Currently there are 50 outstanding preferred shares and 500 common shares outstanding. The dividends that Kate paid were $6 per share on the preferred shares and $2 per share on the common shares. Provide the journal entry for the payment of the cash dividends.

Journal Entry for both type of shares is given below

Explanation:

DATA

Preference shares = 50

Common shares = 500

Dividend for preference shareholders = $6/share

Dividend for Common shareholders = $2/share

Entry                                                       DEBIT         CREDIT

Dividend (for preference shares)         $300

Dividend (for common shares)            $1000

Cash                                                                           $1,300

Working

Preference shares dividend = 50 x $6/share = $300

Common shares dividend = 500 x $2/share = $1000