October 30, 2016 admin

Dividends Declared

Liabilities and Net Worth

DIVIDENDS DECLARED NET WORTH ACCOUNT
2820

ACCOUNT EXPLANATION
Cash or fair market value of stock dividends declared during the current year by the board of directors.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Cash dividend declared by board of directors G
    Dividends Declared 2820
      Dividends Payable 2110
             
  Common stock dividend declared G
    Dividends Declared 2820
      Dividends Payable 2110
COMMENTS
  • This account should be used only by dealerships operating as corporations.
  • Dividend declarations should be supported by the minutes of the board of directors.
  • “Tax Option” corporations have special legal and accounting requirements related to the recording of retained earnings and distributions of profit. Accounting advice and legal and tax counsel should be obtained regarding these requirements. For financial statement purposes, distributions of profit by “Tax Option” corporations should be reported on the “Dividends Declared” line.
  • At year end, the balance in this account should be transferred to Account 2810, Retained Earnings.