1. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 14-1 Distributing Corporate Earnings to Stockholders

2. CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 14-1 STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION page 405 (3000) STOCKHOLDERS’ EQUITY 3110Capital Stock 3120Retained Earnings 3130Dividends 3140Income Summary Owner’s Equity section is now titled Stockholders’Equity Capital Stock is the value of paid-in equity for all of the stockholders. Retained Earnings is used to record the corporation’s earnings. Dividends is earnings that will be distributed to stockholders.

3. CENTURY 21 ACCOUNTING © Thomson/South-Western DECLARING A DIVIDEND At the stockholders’ meeting the BOARD of DIRECTORS declares a dividend be paid to the stockholders. (declaring a dividend) December 15. Hobby Shack’s board of directors declared a quarterly dividend of $2.00 per share; capital stock issued is 2,500 shares; total dividend, $5,000.00. Date of payment is January 15. Memorandum No. 79. Dividends Dividends Payable 5,000.00

4. CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 14-1 JOURNALIZING A DIVIDEND page 406 December 15. Hobby Shack’s board of directors declared a quarterly dividend of $2.00 per share; capital stock issued is 2,500 shares; total dividend, $5,000.00. Date of payment is January 15. Memorandum No. 79.

5. CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 14-1 PAYING A DIVIDEND page 407 January 15. Paid cash for quarterly dividend declared December 15, $5,000.00. Check No. 379.