Luca's foods has outstanding 650 shares of 1% preferred stock, $100 par value; and 1 comma 800 shares of common stock, $ 25 par value. luca's declares dividends of $ 15 comma 300. what is the correct entry?

The correct entry is:

Dr Retained Earnings                                          15,300

Cr Preferred stock - Dividend payable              650

Cr Common stock - Dividend payable               14,650

(to record the declaration of $15,300 dividend payment to 650 preferred stocks and 1,800 common stocks)

Explanation:

Please find the detailed calculations which are shown as below:

Dividend paid to preferred stocks = Number of preferred stocks outstanding x interest rate in preferred stock x par value of preferred stock = 650 x 1% x 100 = $650 .

Dividend paid to common stocks = Total Dividend paid declaration - Dividend paid to preferred stocks = 15,300 - 650 = $14,650 .

answer; /// the above statement is (true);