Question

Cash dividends involve three events. On the date of declaration, the directors bind the company to pay the dividend. A dividend declaration reduces retained earnings and creates a current liability. On the date of record recipients of the dividend are identified. On the date of payment, cash is paid to stockholders and the current liability is removed. Neither a stock dividend nor a stock split alters company value. However, the value of each share is less due to the distribution of additional shares. The distribution of additional shares is according to individual stockholders' ownership percentage. Small stock dividends (s25%) are recorded by capitalizing retained earnings equal to the market value of distributed shares. Large stock dividends (25 % ) are recorded by capitalizing retained earnings equal to the par or stated value of distributed shares. Stock splits do not require journal entries but do require changes in the description of stock. Knowledge Check 01 The three dates related to a cash dividend include all of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Date of declaration |Date of payment 7 Date of issuance Date of record 7 Date of payable

Answer 1

The three dates related to cash dividend include, Date of declaration - Explanation: Announcement Date Date of record - Explanation: Date decided for issuing checks Date of payment - Explanation: Payment Date Therefore, first second and fourth options are to be chosen. For any queries/doubts, please post in comment section. I would take up the same.