Fundamentals of Financial Accounting: PA11-2 National Chocolate Corp. produces chocolate bars

Fundamentals of Financial Accounting

PA11-2 Recording Cash Dividends
National Chocolate Corp. produces chocolate bars and snacks under the brand names Blast and Soothe. A press release contained the following information:

March 5, 2010— National Chocolate Corp. today announced that its Board of Directors has declared a special “ one- time” cash dividend of $ 1.00 per share on its one million outstanding common shares. The dividend will be paid on April 30 to shareholders of record at the close of business on March 26.

Required:
1. Prepare any journal entries that National Chocolate Corp. should make as the result of information in the preceding report. Assume that the company has 1.0 million shares outstanding on March 5, the par value is $ 0.01 per share, and the stock price is $ 10 per share.
2. What two requirements would the board of directors have considered before making the dividend decisions?
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