Fowler Co.'s balance sheet showed the following at December 31, 2021: A cash dividend is declared on December 31, 2021, and is payable on January 20, 2022, to shareholders of record on January 10, 2022.

The detailed answer is under the explanation tab:

Explanation:

I assume the complete question is as follows:

(1.) Prepare all appropriate journal entries, assuming a cash dividend in the amount of $1.00 per share.

(2.) Prepare all appropriate journal entries, assuming a cash dividend in the amount of $5.00 per share.

I will base my solution on the above two requirements:

Prepare all appropriate journal entries, assuming a cash dividend in the amount of $1.00 per share.

Solution:

Journal entry 1:

Debit: Dec 31st Profit & loss Appropriation/ reserves Account Dr $1 / share

Credit: Proposed Dividend $ 1/ share

Journal entry 2:

Debit: 20th Jan Proposed dividend Account Dr $ 1/ share

Credit: Bank $ 1/ share

Prepare all appropriate journal entries, assuming a cash dividend in the amount of $5.00 per share.

Solution:

Journal entry 1:

Debit: Dec 31st Profit & loss Appropriation/ reserves Account Dr $5 / share

Credit: Proposed Dividend $ 5/ share

Journal entry 2:

Debit: 20th Jan Proposed dividend Account Dr $ 5/ share

Credit: Bank $ 5/ share

Key points:

Following are the journal entries of dividends

1. When dividend is proposed by company out of net profit.

Debit: Profit and Loss Appropriation Account

Credit: Proposed Dividend Account  

2. When Proposed dividend is paid by Company

Debit: Proposed Dividend Account

Credit: Bank Account

3. When Dividend is Declared Out of Retained Earning

Debit: Retained Earning Account

Credit: Dividend Account

4. When Such Dividend is Paid

Debit: Dividend Account

Credit: Bank Account

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