Recording Liquidating Dividends

On November $1$ of Year $2,$ Toni Corp. declared a cash dividend of $$3$ per share on its $10,000$ outstanding shares of common stock $($$$1$ par, originally sold at $$10$ per share$).$ The dividend is payable on January $5$ of Year $3,$ to its stockholders of record on December $30$ of Year $2.$ On its declaration date, the balance in the retained earnings account was $$20,000.$

a$.$ Provide the entry for declaration of the dividend on November $1$ of Year $2.$

Date Account Name Dr$.$ Cr$.$

Nov. $1,$ Year $2$

$0$

$0$

Answer

$0$

$0$

Answer

$0$

$0$

Answer

To record declaration of dividend.

b$.$ Provide the entry for distribution of the dividend on January $5$ of Year $3.$

Date Account Name Dr$.$ Cr$.$

Jan. $5,$ Year $3$

Dividends Payable

$30,000$

$0$

Answer

Cash

$0$

$30,000$

Answer

To record distribution of dividend.

c$.$ Are there any potential issues in recording the cash dividend?