Lupinski Distributors has 1,000,000 shares of common stock outstanding. On January 11 of the current year, Lupinski declared a cash dividend of $0.20 per share, payable on March 9 to stockholders of record on February 12.
(a) When did this dividend become a liability to Lupinski?
(b) Prepare any journal entries required in Lupinski’s accounting records relating to this cash dividend on the following dates in the current year:
(1) January 11
(2) February 12
(3) March 9
(4) December 31
(c) What group of individuals authorized the declaration of this dividend?
(d) What general types of information must public companies regulated by the SEC disclose in their annual reports regarding their dividend policies? Why is this information important to potential investors?