Dividends Require Two Accounting Entries, One When the Dividend Is

question 17

Multiple Choice

Dividends require two accounting entries, one when the dividend is declared and another when it is paid. What is the correct entry to record the declaration of a cash dividend of 20c a share calculated on 100 000 shares?

• A) Debit dividend payable $20 000; credit cash at bank $20 000
• B) Debit retained profits $20 000; credit dividend payable $20 000
• C) Debit bank $20 000; credit share capital $20 000
• D) Debit dividend payable $20 000; credit retained profits $20 000

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