Fetzer Company declared a $0.35 per share cash dividend to be paid to shareholders. The company has 380,000 shares issued and 16,000 shares in treasury stock. To record the payment of the dividend, journal entries were made to debit retained earnings and credit common dividends payable for the total amount to be paid, then debit common dividends payable and credit cash for the amount actually distributed.

1. Fetzer Company declared a $0.35 per share cash dividend. The company has 400,000 shares
authorized, 380,000 shares issued, and 16,000 shares in treasury stock. The journal entry to
record the payment of the dividend is:
Debit Retained Earnings $133,000; credit Common Dividends Payable $133,000.
Debit Common Dividends Payable $127,400; credit Cash $127,400.
Debit Retained Earnings $127,400; credit Common Dividends Payable $127,400.
Debit Retained Earnings $140,000; credit Common Dividends Payable $140,000.
Debit Common Dividends Payable $133,000; credit Cash $133,000.