Recording Liquidating Dividends

On November 1 of Year 2, Toni Corp. declared a cash dividend of $3 per share on its 16,000 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 $32,000.

a. Provide the entry for declaration of the dividend on November 1 of Year 2. b. Provide the entry for distribution of the dividend on January 5 of Year 3. c. Are there any potential issues in recording the cash dividend