In a school homework format, you might find the problem setup by giving you:
(a)Retained Earnings balance at the beginning of the year
(b)Additional Earnings during the year (may be before of after taxes)
(c)Dividends paid to preferred stock
(d)End of year retained earnings balance.
(e)Number of shares
In the above scenario, the per-share cash dividend would be calculated by the formula:
(a + b - c - d) / e
Cash dividend paid has nothing to deal with net income as net income is calculated first and after that it is distributed. If cash dividend is received then it is included in net income calculations and increases the net income.
To calculate the dividend paid in a cash flow statement, you would look at the "financing activities" section and find the line item that represents dividends paid to shareholders. This amount represents the cash paid out to shareholders as dividends during the specified period.
To calculate the amount of cash dividends paid by a company, multiply the dividend per share by the total number of shares outstanding.
A declared cash dividend is recorded by debiting the dividend account and crediting the dividend payable account.
dividend will affect the cash flow when actual cash is paid and not at the time of declaration of dividend.
It is a Cash Dividend
Dividend receivable Debit Cash dividend Credit Cash Debit Dividend receivable Credit
if receiveddebit cash / bankcredit dividend incomeif paydebit dividendcredit cash / dividend payable etc
A stock dividend is when a company distributes additional shares of its stock to shareholders, while a cash dividend is when a company pays out cash to shareholders as a form of profit sharing.
In Cash flow under the financing activities shown as dividend paid.
If we pay Dividend the cash flow will decrease as money will go out
[Debit] Dividend xxxx [credit] cash / bank xxxx