Immediately after the close of the previous year, a dividend was declared which amounted to $27,142, and this amount was debited through the journal to Profit and Loss and credited to "Unpaid Dividends." As the dividends were paid the payments were charged from the cash book to this account, the balance showing the amount remaining unpaid. A list showing the amounts of all items included in this balance and the names of those to whom they were due, accompanied the annual report.
The payment of dividends in a corporation with a large number of stockholders necessitates the drawing and entering of a large number of checks. It is not necessary that each of these should pass through the general cash book, but if they do, a column headed "Dividends" should be provided. The usual method is to deposit in a special bank account the amount required to pay dividends, either in one sum or smaller sums, as may be convenient, and to issue against this account special checks marked "Dividend Check." This renders the checking of this account a simple matter and tends to "clean" accounts.