Question

18. On June 15, 20X1, the board of directors of the Harford Company declared a dividend outstanding common stock of $1.25 per share payable on July 31, 20x1, to stock- holders of record on July 11, 20X1. Under which of the following situations would you be entitled to the dividend declared by the Harford Company? 1 on ) You purchased Harford's stock on July 9 and sold it on August 1. 2) You purchased Harford's stock on July 1 and sold it on July 20. 3) You purchased Harford's stock on July 1 and sold it on August 5. 4) You purchased Harford's stock on July 9 and sold it on July 20. You would be entitled to the dividend in A. situation 3. B. situations 2 and 3 C. situations 1, 2, and 3. D. situations 1 and 3

Answer 1

In this Case those Shareholders as on the July 11, will be eligible for the Dividend and it will be paid on the 31st july. So it should be noted that we must be the shareholders on both the dates.

In this case only in Situation 1 and 3 we will be entitled for the dividend as shares are sold after 31st July i.e after dividend Payment.

So Answer is (D)