A press release contained the following announcement:

Castleton, Sask., April 30, 2017: Ridgeton Corporation announced today that its Board of Directors declared a quarterly cash dividend of $0.12 per share of the Corporation’s outstanding common shares, payable June 26, 2017, to shareholders of record at the close of business on June 12, 2017. This represents a reduction from the $0.42 quarterly dividend paid by the Corporation since 2015. Frederick Furter, chairman and chief executive officer, said, “In today’s uncertain and challenging economic environment, we believe it is important to preserve liquidity. By lowering the dividend to $0.12 per quarter, we will reduce cash outflows by $54 million in 2017. This action will strengthen our balance sheet, improve our credit metrics, and provide greater financial flexibility.”

At the time of the press release, Ridgeton had 150,000,000 shares authorized and 60 million outstanding. The par value for the company’s shares is $0.50 per share.

Required:

1. Prepare journal entries as appropriate for each of the three dates mentioned above.

2. Explain how a dividend cut from $0.42 to $0.12 will strengthen the company’s balance sheet.