Dividend entry liquidating
The dividend rate may be quoted in terms of the dollar amount each share receives (dividends per share, or DPS), or It can also be quoted in terms of a percent of the current market price, which is referred to as the dividend yield.A company's net profits can be allocated to shareholders via a dividend, or kept within the company as retained earnings.For the most part, such a distribution is made from the company's capital base, and as a return of capital, is typically not taxable for shareholders.This distinguishes a liquidating dividend from regular dividends, which are issued from the company's operating profits or retained earnings. A liquidating dividend may be made in one or more installments. S., a corporation paying out liquidating dividends will issue to its shareholders a Form 1099-DIV showing the amount of the distribution.For example, a firm may be liquidated because the officers believe its stock price does not adequately reflect the value of its assets.
With the exception of stock dividends, all the other dividends reduce the stockholder’s equity in the corporation. Cash = 3,075,000 Dividends paid based on other than retained earnings are called “liquidating dividends”, as a return of contributed capital rather than a distribution of retained earnings. Retained Earnings 50% [30,000 share x ] = 300,000 [Credit].Mutual funds pay out interest and dividend income received from their portfolio holdings as dividends to fund shareholders.In addition, realized capital gains from the portfolio's trading activities are generally paid out (capital gains distribution) as a year-end dividend.Its called a liquidating dividend because it takes money out of the company without sufficiently replenishing it with profits.A type of payment made by a corporation to its shareholders during its partial or full liquidation.