Answered

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Bal Corp. declared a $25,000 cash dividend on May 8, 20X5, to stockholders of record on May 23, 20X5, payable on June 3, 20X5. As a result of this cash dividend, working capital
a) Was not affected.
b) Decreased on June 3.
c) Decreased on May 23.
d) Decreased on May 8.

Sagot :

Zviko

Answer:

b) Decreased on June 3

Explanation:

May 8, 20X5

This is the dividend declaration date. The accountant simply makes an accounting entry to recognize dividend (debit) and increases liabilities arising due to shareholders for dividend obligation (credit)

May 23, 20X5

This date gives us the number of shareholders who are eligible for the dividend.

June 3, 20X5

This date is when the cashflow happens, Cash decreases by $25,000 and the liability once recognized on May 8, 20X5 decreases. Cash is an element of Working Capital. Decrease in cash means a decrease in Assets and consequently a decrease in working capital.

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