Question

After a successful year of operations, CIC has decided to pay a dividend to its shareholders....

After a successful year of operations, CIC has decided to pay a dividend to its shareholders. On January 1, CIC declared a $3,000 cash dividend to be paid on January 31 to shareholders of record on January 15.

Required

Record the events occurring on January 1 and January 31 in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA).

Date

Balance Sheet

Income Statement

Cash Flow

Assets

Liab.

Equity

Rev.

Exp.

Net Inc.

Cash

Div. Pay.

C. Stock

R. Earn.

Jan. 1

Jan. 31

Why is no entry required for January 15?

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Answer #1

There is no entry on January 15 because the liability to pay dividend will arise when the dividend is declared and that particular liability will be paid off on January 30. there is no liability or asset or expense or income arise on January 15 thus entry is not required

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