Dividends Declared near the End of an Accounting Period Require

question 5

Multiple Choice

Dividends declared near the end of an accounting period require two accounting entries:
1) when the dividend is declared; and
2) when the dividend is paid.
The correct entry to record the declaration of a cash dividend of 10c a share calculated on 200 000 shares is:

• A) DR Dividend payable $20 000; CR Bank $20 000
• B) DR Bank $20 000; CR Share capital $20 000
• C) DR Retained earnings $20 000; CR Dividend payable $20 000
• D) DR Dividend payable $20 000; CR Retained earnings $20 000

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