Dividends ch 9 - No journal entry required on this date...

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Dividend s –return of Corporations earnings to shareholders Cash dividends – cash given out to shareholders Stock dividends – additional shares given out to stockholders Adequate cash and retained earnings are necessary but that alone doesn’t guarantee dividends – make sure they have enough money to give out to people Decision to pay dividends rests with the Board of Directors Dividends impact stock’s market value – When they issue dividends, it says that the management is confident in the company and that they think they are doing well, so it raises price Accounting for dividends – 3 important dates Date of declaration : liability for dividend created Date of record : date to determine ownership – who owns the stock? Whoever owns the stock at this date gets the dividend
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Unformatted text preview: No journal entry required on this date Date of payment : payment to stockholders Check is written out to stockholders Dividends only paid on outstanding shares Entries for cash dividends On July 1, Venus Corporation, declared a $2 per share dividend on its 10,000 shares of $10 par outstanding Common Stock, payable on September 30, to stockholders of record on August 15. Journal entry on date of declaration July 1 DEBIT retained earnings 20,000 ($2X10,000) CREDIT common dividends payable 20,000 Dividends are paid through the balance of retained earnings Journal entry on date of record August 15 No journal entry required for this date Journal entry on date of payment September 30 DEBIT common dividends payable 20,000 CREDIT cash 20,000...
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