Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 11 - Reporting and Analyzing Stockholders' Equity - Self-Test Questions - Page 602: 8

Answer

D - declaration date and the payment date

Work Step by Step

Cash dividends are recorded as journal entries on both the declaration date and the payment date. On the declaration date, the dividend becomes a liability that is due to stockholders. On the payment date, the dividend is actually paid out in the form of cash. Both of these events are considered accounting transactions and have to be recorded via a journal entry.
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