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Flashcards in dividends Deck (9)
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1
Q

date of record

declaration

A

no entry

re
div payable

2
Q

paid div

A

div pay

asset

3
Q

gave property in a dividend thats fv is 6 but cv is 4

A

declaration

re 6
div payable 6

payment
div payable 6
asset 4
gain 2

4
Q

scrip dividend

A

A scrip dividend is first distributed in note payable (scrip) form because the firm does not have the cash at the date of declaration to pay the dividend but wants to assure the shareholders that the dividend is forthcoming.
A.
Interest paid – Interest is paid on the note until cash is paid.
B.
General entries –
At declaration:
Retained earnings amount of dividend declared
Scrip dividend payable a liability account
At payment:
Scrip dividend payable amount of dividend declared
Interest expense
Cash dividend plus interest

5
Q

liquidating div
A liquidating dividend is a return of capital, rather than a return on capital. It is a return of contributed capital – an amount invested by the shareholder.

A

Retained earnings 10,000
Contributed capital 2,000
Dividends payable 12,000
The liquidating portion is $2,000.

6
Q

small stock dividends are less than

large stock dividends are greater than

A

25% of shares o/s-capitalize at market value at declaration date
25%-capitalize at par value on declaration date

7
Q

stock split in form or a stock div

A

apic-common

common stock

8
Q

stock split

A

cuts par in half
doubles o/s shares
not a div
no je required

9
Q

stock right

A

record at issuance
(market price-exercise price)*#shares

exercise
record stock issuance and exercise price
remove oe account credited at issuance

supple expense 11500
cash 10000
stock right os(oe) 1500