Problem

Effect of cash dividends on financial statementsOn May 1, 2011, Lott Corporation declared...

Effect of cash dividends on financial statements

On May 1, 2011, Lott Corporation declared a $120,000 cash dividend to be paid on May 31 to shareholders of record on May 15. '

Required

a. Record the events occurring on May 1, May 15, and May 31 in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA).

Date

Assets = Liab. + Com. Stock + Ret. Earn.

Rev. - Exp. = Net Inc.

Cash Flow


b. Prepare journal entries for all events associated with the dividend.

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