How would an investor account for the receipt of a cash dividend from Microsoft? Original blog posting (April 5, 2016)

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Presentation transcript:

How would an investor account for the receipt of a cash dividend from Microsoft? Original blog posting (April 5, 2016)

Microsoft Microsoft declared a $0.36 per share divided on December 2, 2015 Payable on March 10, 2016 to shareholders of record as of February 18, 2016

Microsoft Assume the following Microsoft investor activity: Franklin Company purchased 100 shares on January 2, 2015, and sold those shares on January 29, 2016. Strauss Corporation purchased 100 shares on February 14, 2014, and sold those shares on February 22, 2016. Elway Inc. purchased 100 shares on February 19, 2016; it still owns those shares.

Question 1 Which of the investors will receive the dividend? Why?

Question 2 On what date does the dividend become Dividends Receivable for the investor? On what date would the investor receive the cash dividend?

Question 3 On what financial statement will that dividend appear for the investor who receives the dividend? How will the dividend be classified on that statement?

Question Recap Which of the investors will receive the dividend? Why? On what date does the dividend become Dividends Receivable for the investor? On what date would the investor receive the cash dividend? On what financial statement will that dividend appear for the investor who receives the dividend? How will the dividend be classified on that statement?

For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu