The payment of a dividend results in a decrease in stockholders’ equity (debit to Dividends) and a decrease in assets (credit to Cash).
Because the dividend occurred after the end of the fiscal year ended on January 1, 2019, it does not affect the amounts reported in that year’s financial statements. However, investors may find this information useful, and the dividend should be disclosed in the notes to the financial statements. For example, The Cheesecake Factory Incorporated (CAKE) included the following note in its financial statements for the year ending January 1, 2019:
On February 13, 2019, our Board approved a quarterly cash dividend of $0.33 per share to be paid on March 19, 2019 to the stockholders of record on March 4, 2019.
Yes. A transaction or event may occur after the end of a fiscal year that provides evidence of a condition that existed at the balance sheet date or affects an estimate used in preparing the financial statements. For example, a lawsuit that existed at the end of the year may be settled at an amount different than previously expected. In this case, the financial statements should be adjusted for this “subsequent event.”