In accounting why liquidating is declaired
The most senior claims belong to secured creditors, who have collateral on loans to the business.
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On January 2, 2010, Lake Mining Co.'s board of directors declared a cash dividend of 0,000 to stockholders of record on January 18, 2010, payable on February 10, 2010.
The dividend is permissible under law in Lake's state of incorporation.
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 are treated as a reduction of contributed capital, either additional paid-in-capital or a special contracontributed capital account, designated as “Contributed Capital Distributed” as a “Liquidating Dividend”. Common Stock Dividend Distributable = 300,000 At the time of distribution the following journal entry is required: [Debit].