With the exception of stock dividends, all the other dividends reduce the stockholder’s equity in the corporation. Cash = 3,075,000 Dividends paid based on other than retained earnings are called “liquidating dividends”, as a return of contributed capital rather than a distribution of retained earnings. Retained Earnings 50% [30,000 share x ] = 300,000 [Credit]. Retained Earnings [Cash Dividend Declared] = 2,000,000 [Credit]. Date of record, April 15, 2009 Memorandum entry that the firm will pay a dividend to all stockholders of record as of today, the date of record. Retained Earnings [Property Dividend Declared] = 0,00 [Credit]. The accounting treatment at the date of declaration consists of debiting retained earnings or scrip dividends declared and crediting notes payable to stockholders or scrip dividend payable. Retained Earnings [Scrip Dividends Declared] = 3,000,000 [Credit]. The transaction is made by a capitalization of retained earnings resulting in a reduction of retained earnings and an increase in some contributed capital accounts. Additional Paid-in-Capital from Stock Dividend 30,000 2. Common Stock Dividend Distribution = 120,000 [Credit].If there is a surplus after all the company assets have been dealt with and the debts and liquidation expenses have been paid, then it will be distributed back to the shareholders.
If the business is closed, your employment will end.If you have lost your job, you can file a claim in the liquidation if you are owed any salary, wages, holiday pay or redundancy.If the liquidator recovers money the Companies Act 1993 sets out the priority of payments to include: The liquidator must send a report to all creditors outlining the company’s financial position at the date of liquidation within 25 working days from the date of liquidation.In a voluntary liquidation the report is sent within five working days.A liquidator is appointed when a company is placed into liquidation.
The liquidator takes control of all the company’s unsecured assets, which are sold to repay the creditors.Your claim may be considered preferential, which means you will be paid out before the unsecured creditors if there are funds available.Emergency financial assistance may be available from Work and Income New Zealand (WINZ), your local City Mission or the food bank. At the date of declaration the bonds had a market value of 0,000. Date of Declaration Investments in Lie Dharma Company [Debit]. Gain on Appreciation of Bonds = 100,000 [0,000 – 0,000] [Debit]. In such case, firms may elect to declare a “”—by issuing promissory notes requiring them to pay the dividends at a later date. Cash = 2,500,000 A firm with adequate retained earnings but insufficient liquidity may elect to issue “stock dividends” by a pro rate distribution of additional shares of the firm’s own stock to its stockholders. Common Stock Dividend Distributable = 120,000 [Credit]. Cash = 2,000,000 Let’s assume that the PUTRA Corporation declares a property dividend, payable in bonds of Lie Dharma Company being held to maturity and costing 0,000. Investments in Lie Dharma Company Bonds = 600,000 Firms may find themselves with sufficient retained earnings to declare a dividend but not enough liquidity for distribution.They can claim as an unsecured creditor for any shortfall.