Various titles are used for the account showing dividends which have been declared by the board of directors payable to the stockholders of the bank, but the foregoing title is considered a good one. At the time of declaration the general ledger entry will be as follows:
Some banks prefer to set up also another account called dividend checks outstanding but that is not regarded as vital. Assume that checks have been issued to all of the stockholders of record as of the date of declaration. As these checks are paid or redeemed by the bank, the entries made in the general ledger are as follows:
An auxiliary dividend record is usually kept showing opposite each stockholder's name the number of shares and the amount of his dividend. The total of all of stockholders' dividend amounts should equal the balance of the account dividends payable. If a date paid column is added to the auxiliary dividend record, that proof may be maintained until all of the dividends have been entirely paid.
These are certificates of a time character issued by the bank similar in all but the maturity factor to demand certificates of deposit. They are accounted for in the same manner so that there is no need for further illustration.