Question

(In 200 words using a real-life example from a public American business)Part 4: Describe the significance for the cash dividend Declaration date. Explain if there is a journal entry or some other type of record necessary for the cash dividend Declaration date. (Review page 585)

in 200 words please

Answer 1

Cash dividends are the cash payments made by a company to its shareholders. Most companies prefer this option to share their profits. They declare cash dividends periodically. Cash dividends are remitted on a per-share basis. It is worth mentioning that each business enterprise formulates and follows its own dividend policy and regularly evaluates whether or not a dividend cut or a rise in dividend is required.

The board of directors of an enterprise will announce cash dividends on a stipulated date, which is called a dividend declaration date. The dividend declaration date includes remitting a definite amount of money per share. The record date is generated once the notification is sent. The record date is the date on which a company decides who is qualified to receive the dividend.

Journal entry on declaration of dividend is

Dividends [retained earnings].... Debit

Dividend payable. ....... Credit