Intermediate Accounting -Accounting Notes #3

Intermediate Accounting -Accounting Notes #3 - 3 Dividend...

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3 Dividend Dates 1. Date of Declaration a. Board of Directors approves the dividends b. Journal Entry: b.i. Dividends (declared) (increase in contra-equity) closed to retained earnings b.i.1. Dividends Payable (increase in liability) 2. Date of Record a. Whoever owns the stock on this date gets dividend b. Stock transfer agent gets the number of shares and names and addresses correct. c. Sales of stock after this date “ex-dividends” 3. Date of Payment – write the checks a. Journal Entry: a.i. Dividends Payable (reducing liability) a.i.1. Cash (reducing asset) Different Types of Statements: Balance Sheet (Statement of Financial Position): Assets = Liability + Owner’s Equity (Owner’s Contribution) Income Statement: Revenue – Expenses = Net Income Statement of Retained Earnings: Beginning Balance of Retained Earnings (Credit +) from last year’s B/S + Net Income (Credit +) Subtotal [max amount of dividends possible] (Credit +) <Dividends Declared> (Contra – Equity Debit +) <Debit +> Ending Balance of Retained Earnings (Credit +)
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Intermediate Accounting -Accounting Notes #3 - 3 Dividend...

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