Basse Corporation has 7,000 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Answer and Explanation:

The journal entries are as follows:

1. cash dividend Dr (7,000 shares × $1) $7,000

            To Dividend payable $7,000

(Being the declaration of the dividend is recorded)

Here the cash dividend is debited as it increased the balance of the dividend and dividend payable is credited as it increased the liabilities

2. Dividend payable Dr $7,000

        To Cash $7,000

(being the payment is recorded)

Here the  dividend payable is debited as it decreased the liabilities and cash is credited as it also decreased the assets

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