Kelsey International declared a dividend on Friday, December 6. The record date is Monday, December 16. What is the latest date that you can purchase this stock if you wish to receive this dividend? Assume there are no banking holidays within this period of time. A. December 11, Wednesday B. December 12, Thursday C. December 17, Tuesday D. December 18, Wednesdays

Kelsey International

The latest date that you can purchase this stock if you wish to receive this dividend is:

B. December 12, Thursday.

Explanation:

Three important dates are recognized for dividend payments.  They are the date of declaration, the date of record, and the date of payment.  The date of declaration is when the entity declares the dividend.  On that date, the liability for the dividend is established.  Another important date is the date of record.  This is the date on which the company checks its records to identify shareholders of the company.  Any investor not listed on that date is not eligible for a dividend payout.  No accounting records are made on the date of record.  The date of payment is the day the company sends out the dividend warrants to all shareholders of record.  The Cash Account is credited and the Dividend Liability account debited on the date of payment.

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