LMN Ltd declared an interim dividend on 12 February 2012 of 5 cents per share (500 000 issued shares)and paid it on 3 March 2012.The journal entry on 12 February 2012 would include:
A) DR Interim dividend declared,$25 000
B) CR Cash,$25 000
C) CR Retained profits,$25 000
D) none of the above.

Question

Quizplus · Accepted Answer

The declaration of an interim dividend results in a debit to the Interim dividend declared account and a credit to the Retained profits account.

LMN Ltd Declared an Interim Dividend on 12 February 2012