One of the rewards of being a common stock shareholder is receiving income from the corporation in the form of cash dividends. When the company announces a dividend, the corporation is obligated to distribute the cash to its shareholders at a future date. The obligation to pay the cash dividends is properly recorded in the corporation's books by increasing the balance sheet liability account "dividends payable."
Obtain a copy of the corporation's balance sheet, a financial statement that is prepared both monthly and annually. Check the date of the balance sheet to make sure you have the data for the current year.Step 2
Locate the liabilities section of the company's balance sheet. Look through each line item listed under this section until you find "common stock dividends payable."Step 3
Examine the account balance, which represents all common stock dividends declared by the board of directors that will be paid at a future date, usually weeks after the announcement. Confirm that the account has been reconciled with the preparer of the balance sheet.
Keela Helstrom began writing in 2010. She is a Certified Public Accountant with over 10 years of accounting and finance experience. Though working as a consultant, most of her career has been spent in corporate finance. Helstrom attended Southern Illinois University at Carbondale and has her Bachelor of Science in accounting.