Figure A company issued 30 shares of?. Figure A corporation issued shares of? The resulting journal entry would include which of the following?
Figure The date the board of directors votes to declare and pay a cash dividend is called the:. Figure Which of the following is true of a stock dividend? Figure On April 2, West Company declared a cash dividend of?
There are 50, shares outstanding. What is the journal entry that should be recorded? Figure Assuming the same facts as Figure , what is the journal that should be recorded on May 5, the date of payment? Figure When does a corporation incur a liability for a dividend? Figure How does a stock split affect the balance sheet of a corporation?
In total, there is no change to the total dollar value of the equity section, just a change in the number of shares outstanding and a change in the par or stated value of the stock. On this date, the company has issued 12, shares but 2, shares are held as treasury shares. What is the journal entry to record the declaration of this dividend? The company pays the dividend on December What is the journal entry to record the payment of the dividend?
At that time, there are 3, shares of? What is the journal entry to record the declaration of the dividend? At that time, there are 10, shares of? What is the journal entry to record the stock dividend distribution on July 31? What is the new par value of the shares and how many shares are outstanding after the split?
What is the total amount of equity before and after the split? Figure Aggregate Mining Corporation was incorporated five years ago. It is authorized to issue , shares of? It is also authorized to issue , shares of? It has issued only 50, of the common shares and none of the preferred shares.
In its sixth year, the corporation has the following transactions:. In its seventh year, the corporation has the following transactions:. It has issued 50, of the common shares and 1, of the cumulative preferred shares. The corporation has never declared a dividend and the preferred shares are one years in arrears.
Aggregate Mining has the following transactions this year:. Journalize these transactions. For the stock split, show the calculation for how many shares are outstanding after the split and the par value per share after the split.
The company was incorporated ten years ago. It is authorized to issue 50, shares of? It has issued 5, common shares and none of the preferred shares. It has issued 5, common shares and 2, of the preferred shares. Figure As a bakery business continues to grow, cash flow has become more of a concern. The board of directors would like to maintain the market share price, so a discussion ensues about issuing a stock dividend versus a cash dividend. As a newly appointed board member you listen to the conversation and need to cast your vote.
Which do you vote for: stock dividend or cash dividend? Figure Use the internet to find a company that declared a stock split within the last 1—2 years. Why did it declare the split? Is there any reason to think the split impacted the price?
Skip to content Corporation Accounting. Chance Card. A Chance card from a Monopoly game indicates that the bank pays you a dividend of? The Nature and Purposes of Dividends Stock investors are typically driven by two factors—a desire to earn income in the form of dividends and a desire to benefit from the growth in the value of their investment.
So Many Dividends. Cash Dividends Cash dividends are corporate earnings that companies pass along to their shareholders. Stock Dividends Some companies issue shares of stock as a dividend rather than cash or property. The journal entry is: The subsequent distribution will reduce the Common Stock Dividends Distributable account with a debit and increase the Common Stock account with a credit for the? Samsung Boasts a to-1 Stock Split.
Accounting for a Stock Split. Dividend Accounting. Recording Stock Transactions. Key Concepts and Summary Dividends are a distribution of corporate earnings, though some companies reinvest earnings rather than declare dividends.
There are three dividend dates: date of declaration, date of record, and date of payment. Cash dividends are accounted for as a reduction of retained earnings and create a liability when declared. When dividends are declared and a company has only common stock issued, the reduction of retained earnings is the amount per share times the number of outstanding shares. A property dividend occurs when a company declares and distributes assets other than cash.
A stock dividend is a distribution of shares of stock to existing shareholders in lieu of a cash dividend. The entry requires a decrease to Retained Earnings for the market value of the shares to be distributed.
The journal entry requires a decrease to Retained Earnings and a credit to Stock Dividends Distributable for the par or stated value of the shares to be distributed. Some corporations employ stock splits to keep their stock price competitive in the market. Multiple Choice Figure A company issued 40 shares of? It is a liability. The decision to issue a stock dividend resides with shareholders. It does not affect total equity but transfers amounts between equity components.
It creates a cash reserve for shareholders. Dividends Payable 25, Cash 25, Complete the steps to create a new account and select "Other Current Expense" or "Equity" from the Type drop-down list, depending on the method used to account for dividends in your business.
Type "Dividend" in the Name field. Click the "Account" column and select the "Retained Earnings" account from the drop-down list if you are using a Retained Earnings account to track dividends. Enter the amount of the dividend in the Debit column. Write a memo, if desired. If you are using an Equity or Other Current Liability account, select the "Dividend" account from the Account drop-down list. Enter the debit to the Dividend account in the Debit column. Click the "Account" column on the next line and select the "Provision for Dividend" account from the account list.
Enter the amount of the dividend in the "Credit" column to offset the debit from the Retained Earnings account. If you are using an Equity or Other Current Liability account, select the "Provision for Dividend" account from the Account drop-down list. Enter the credit to the Provision for Dividend account in the Credit column. There is no separate balance sheet account for dividends after they are paid. However, after the dividend declaration but before actual payment, the company records a liability to shareholders in the dividends payable account.
After declared dividends are paid, the dividend payable is reversed and no longer appears on the liability side of the balance sheet. When dividends are paid, the impact on the balance sheet is a decrease in the company's dividends payable and cash balance. As a result, the balance sheet size is reduced. If the company has paid the dividend by year-end then there will be no dividend payable liability listed on the balance sheet.
Investors can view the total amount of dividends paid for the reporting period in the financing section of the statement of cash flows. The cash flow statement shows how much cash is entering or leaving a company.
In the case of dividends paid, it would be listed as a use of cash for the period. In addition to cash dividends, companies can also pay stock dividends. This type of dividends increases the number of shares outstanding by giving new shares to shareholders.
Instead of reducing cash, stock dividends increase the number of shares. How a stock dividend affects the balance sheet is a bit more involved than cash dividends, although it only involves shareholder equity. When a stock dividend is declared, the amount to be debited is calculated by multiplying the current stock price by shares outstanding by the dividend percentage.
When paid, the stock dividend amount reduces retained earnings and increases the common stock account. Stock dividends do not change the asset side of the balance sheet—only reallocates retained earnings to common stock. Cash dividends can be made via electronic transfer or check. When a cash dividend is paid, the stock price drops by the amount of the dividend.
After cash dividends are paid, the company's balance sheet does not have any accounts associated with dividends. Financial Statements.
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