The board of directors of Lark Corporation declared a cash dividend of $3.50 per share on 57,000 shares of common stock on June 14,20x5.The dividend is to be paid on July 15,20x5,to shareholders of record on July 1,20x5.The effects of the entry to record the declaration of the dividend on June 14,20x5,are to

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When a company declares a dividend, it creates a liability for the company because it owes money to its shareholders. This liability increases with the amount of the dividend declared. At the same time, the shareholders' equity decreases because the company is distributing some of its profits to the shareholders. Therefore, the entry to record the declaration of the dividend will decrease stockholders' equity and increase liabilities.

The Board of Directors of Lark Corporation Declared a Cash