ACC 221 1st Edition Lecture 11 Outline of Previous Lecture Chapters 7 8 Additional Adjusting Entries Accrued Liabilities o Recording entries even if you have not paid Unearned Revenue Accounts o Someone pays us in advanced for work o Additional Applications Accrued Assets o People have not paid us for services completed Outline of Current Lecture Chapter 10 Dividends What can you do with your money o Options o Dividends o Dividends Process o Retained Earnings Current Lecture Chapter 10 Dividends What can you do with your money o Options Take out savings through bank to gain interest Reinvest in company to get additional equipment inventory or supplies Redistribute money back to owners o Dividends redistributing money back to owners through cash payments Cash account see if we can afford to pay for dividends Cannot only look in retained earnings because we may not have the cash if reinvested into company through equipment supplies or inventory Retained earnings what we are paying the money out of o Dividends process Day of declaration Go to board of directors they decide whether we have enough funds when we are able to make a dividends payment These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute If they agree make an announcement within the market that they will be making a dividends payment to all stockholders o Once announced company has a legal obligation to pay dividends Entry on day of declaration o Dr retained earnings o Cr Dividends payable Liability o Show you are moving retained earnings into dividends payable because you are legally bound to pay this money Day of record At the close of business on the day of record whoever is holding the shares of stocks are who is going to be paid the dividends Determines what investors will receive the checks creates a list of names No entry into accounting system is required as nothing affecting the system has occurred Day of payment Day the checks are sent to investors can be any day within any month All entries do not have to be made within same month will roll over and not affect balances o Dr Dividends Payable o Cr Cash o Retained Earnings Retained earnings will now not only include closing entries but dividends will also run through the account Will be Debited during the day of declaration Old retained earnings dr in dividends will decrease net income current retained earnings at end of month o Pre closing balance sheet reflects this current balance
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