Year total dividends 2006 2007 2008 2009 2010 2011

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Unformatted text preview: shares are held as treasury stock. Thus, only 47,000 shares are eligible to receive a dividend. b. Date of declaration Cash Dividend (–SE) 705,000 Dividend Payable (+L) 705,000 Declared divided. Date of record No journal entry is necessary. Date of payment Dividend Payable (–L) 705,000 Cash (–A) 705,000 Paid dividend. c. Stock Dividend (–SE) Capital, Common Stock (+SE) Declared and issued stock dividend. 235,000a Common Stock (+SE) 47,000b Additional Paid­in 188,000 a $235,000 is calculated as follows: 1. = Number of Shares Outstanding 10% = 47,000 10% = 4,700 Shares 2. Value of Dividend = $50 Fair Market per Share 4,700 Shares to Be Distributed b $47,000 = 4,700 shares to be distributed par value of $10 per share d. Number of Shares to Be Distributed The overall impact of cash dividends is a decline in the Retained Earnings account. Since retained earnings is a part of equity, the debt/equity ratio will increase. Issuance of stock dividends results in no change in the overall stockholders’ equi...
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