HI,

I am stuck on a problem in Intermediate Accounting. I am given the amount of dividends declared in 08 ($100,000) and told that of that amount $25,000 will be paid in January of 2009. As to my understanding, the entire 100,000 should be stated in the Statement of Retained Earnings, because it was all declared and is now a liability, or only the portion paid in 2008 should be reported. :confused: any help would be appreciated:)
Thanks

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Originally Posted by Dawn23

HI,

I am stuck on a problem in Intermediate Accounting. I am given the amount of dividends declared in 08 ($100,000) and told that of that amount $25,000 will be paid in January of 2009. As to my understanding, the entire 100,000 should be stated in the Statement of Retained Earnings, because it was all declared and is now a liability, or only the portion paid in 2008 should be reported. :confused: any help would be appreciated:)
Thanks

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I could be wrong but I am studying the same topic right now and as I understand it, the entire 100,000 should be stated in the Statement of Retained Earnings, because it was all declared in 2008 and is now a liability. Whether it gets paid in 2009, it does not affect the fact that it was declared in 2008 and therefore it became an accrual.

I agree with rubygarcia