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Declaring a Dividend
Action by Board of Directors to distribute corporate earnings to stockholders.
Date of Record
The date at which determines which stockholders are to receive dividends. - must own stock of this date to get the dividend and before the date of declaration.
Date of Declaration
The date at which the Board of Directors vote to distribute a dividend - make the official declaration and becomes public.
Date of Payment
The date on which dividends are actually to be paid to stockholders - usually about a month after the date of declaration.
The board of directors declared a quarterly cash dividend.
DEBIT: Dividends - Common and Stock
CREDIT: Dividends Payable
Paid cash for annual dividend declared on December 15.
DEBIT: Dividends Payable
CREDIT: Cash
How is the total value of the preferred stock calculated?
# of preferred shares outstanding x value per share
How is the preferred quarterly dividend amount calculated?
( Value of preferred stock x Dividend percentage ) / 4
How is the common dividend calculated?
(Total value of preferred stock) - (Quarterly dividend amount)
Stock Dividends
The payment of a dividend with the stock of the corporation.
Why do people use stock dividends?
If there is a shortage of cash and an abundance of stock, people use more stock dividends.
When a 2% stock dividend is declared payable on June 30th. The corporation has 100,000 shares of $0.10 par-value common stock outstanding. The current market price of the stock is $5.30.
DEBIT: Stock Dividends
CREDIT: Stock Dividends Distributable and PIC in Excess of Par Value - Common
How are stock dividends calculated?
( Percentage of the stock dividend ) x (Shares for Stock Dividends ) x ( $5.30 Market Price )
How is the Stock Dividends Distributable calculated?
( $0.10 par value common stock ) x ( Stock Dividends amount (2000) )
How is the PIC calculated?
( Stock dividends ) - ( Dividends Distributable )
Issued 2,000 shares of common stock in payment of its June 1 stock Dividend.
DEBIT: Stock Dividend Distributable
CREDIT: Capital Stock - Common
What does the Payment of Stock Dividend done for?
It shows the actual dividend ( what the stockholders actually get)
Why isn’t Capital Stock used when Stock Dividends are declared?
The stock has not been certificated.
Treasury Stock
Corporation’s own stock that has been issued and required, which buys back from the shareholders.
Why is Treasury Stock used?
The corporation wants to issue a stock dividend so the corporation needs more stock.
Are there any gains or losses when the corporation first buys the stock back?
No
Paid Cash to Kate Mason for 2,000 shares of $5.00 par-value common stock at $9.00 per share, $18,000.00
DEBIT: Treasury Stock
CREDIT: Cash
How is Treasury Stock calculated?
( 2,000 shares of Treasury Stock ) x ($9.00 per share )
What type of account is Treasury Stock contra to?
Capital Stock
When Treasury stock is sold back and its more than original cost!
DEBIT: Cash
CREDIT: Treasury Stock, PIC in Capital from Sale of Treasury Stock
When Treasury Stock is sold and its less than original Cost.
DEBIT: Cash, PIC in Capital from Sale of Treasury Stock
CREDIT: Treasury Stock
Closing Dividends Account
DEBIT: Retained Earnings
CREDIT: Dividends
Current Asset
What type of account is Marketable Securities?
Other Revenue
What is Dividend Revenue classified as?
Buy Back
A program approved by the BOD authorizing the corporation to repurchase its stock.
