Cash dividend



Q45. Cash dividend
(1) On January 10, 20×1, Entity A declared a $1.50 per share cash dividend on 500,000 shares of common stock.
(2) On February 10, 20×1, Entity A paid $750,000 cash dividend declared on January 10, 20×1.
Prepare journal entries to record these transactions.

A45. Cash dividend decreases retained earnings.

(1) January 10, 20×1: to record the cash dividend declared

  Debit Credit
Retained earnings (or cash dividend) 750,000  
     Dividends payable   750,000

[Note]
500,000 shares x $1.50 = $750,000

(2) February 10, 20×1: to record the payment of cash dividend

  Debit Credit
Dividends payable 750,000  
     Cash   750,000

[Note]
Decrease in dividends payable (liability): debit

© AccountingInfo.com