A company declared a cash dividend of $8,560 on december 5, 2015. the company made a cash dividend payment on january 8, 2016. what is the cumulative effect of the declaration and payment of the cash dividend on the company's financial statements?
Provided that the company is using a calendar year in preparing their financial statements, the financial statements would be prepared at year end. Upon the declaration of the cash dividend, the company would be recognizing a liability. This would be considered as a non-adjusting event since it can be clearly concluded that the payment happened after the reporting period. This would not affect the financial statements of the year 2015.
