Cash dividend

Cash dividend belongs in a dated, class-level equity analysis. A cash dividend distributes cash to eligible owners. The workpaper identifies the class rights and declaration, record, and payment dates. A supported declaration normally reduces retained earnings and creates a dividend payable; payment settles it.

Apply it

A board declares $0.40 per share on 500,000 eligible shares. The declared amount is $200,000. The record date identifies recipients but ordinarily creates no new journal entry, and the payment date reduces cash and the payable.

Review cash dividend against preferred dividend arrearage. Reconcile cash dividend to retained earnings restriction, the dated cash dividend evidence, and its final presentation.

The cash dividend record ties preferred dividend arrearage to its source date, measured amount, and retained earnings restriction effect.

Keep the boundary clear

The accountant applies supplied legal approval and class terms. Available cash, positive retained earnings, or management intent alone does not prove that a dividend was validly declared.

Authority

Read ASC 505-10-50-15 for disclosure of dividends declared.