How to Compute Dividends Paid

Dividends are a source of income when you own stock.

A dividend is part of a company's earnings that it pays to owners of the company. This amount is normally paid on a per-share basis, so the company will disclose how much money it is going to pay owners for each share they have. A company accounts for the dividend by first creating a "Dividends Payable" account. Then, when the company pays the dividends, it will move the liability to a "Dividends Paid" account.

Instructions

1. Determine the number of shares outstanding that will receive the dividend. For example, suppose a company has 200,000 shares of common stock outstanding.

2. Determine the dividend rate. This amount of money is typically disclosed by the company. In our example, suppose the company pays a dividend of $0.25 per common share.

3. Multiply the number of shares receiving the dividend by the dividend rate. In our example, 200,000 outstanding common shares times $0.25 equals $50,000 of dividends.

References

• Accounting Info: Stockholders' Equity
• Investopedia: Dividend