(Learning Objective 4: Accounting for cash dividends) Gleneagles Corporation earned a net income of $70,000 during the year ended December 31, 20X6. On December 15, Gleneagles declared the annual cash dividend on its 5% preferred stock (10,000 shares with a total par value of $100,000) and a $0.60 per share cash dividend on its common stock (25,000 shares with a total par value of $50,000). Gleneagles then paid the dividends on January 4, 20X7. Journalize for Gleneagles Corporation:
a. Declaring the cash dividends on December 15, 20X6.
b. Paying the cash dividends on January 4, 20X7.
Did Retained Earnings increase or decrease during 20X6? By how much? (Challenge)