Description
The dates of importance in connection with a cash dividend declared and paid of $55,350 on a corporation's common stock are February 6, March 9, and April 8. Illustrate the effects on the accounts and financial statements for each date.
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Explanation & Answer
The income statement is not affected by the declaration and payment of cash dividends on common stock. (The cash dividends on preferred stock are deducted from net income to arrive at net income available for common stock.)
The cash dividends will be reported as a use of cash in the financing
activities section of the statement of cash flows.
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