In: Accounting
Step:1 Definition of cash Dividend
Cash Dividend is the amount which company distribute to its stockholders in cash from its accumulated profit or its retained earning
Step: 2 Basic concept
The board of director declare the dividend first only then they can pay it to its stockholders (Dividends are always based on shares outstanding). Therefore Two dates are mandatory ie, Dividend declaration date and Dividend payment date.
first entry in the below mentioned journal entries will be
recorded on dividend declaration date
and second entry will be recorded on dividend payment date.
Step: 3 Journal entries are as follow