How will the entry to record the declaration of the dividend on March 1 affect the elements of the financial statements?

Question

Quizplus · Accepted Answer

Dividends declared = Par value of $50 per share × 6% × 1,500 Outstanding shares = $4,500
The declaration will increase liabilities (dividends payable) and decrease stockholders' equity (retained earnings) by $4,500. Since cash has not yet been paid to the stockholders, there is no effect on the statement of cash flows.

How Will the Entry to Record the Declaration of the Dividend