J.Smith,the sole stockholder,received a $100 dividend from Jay's Limo Services.Which of the following general journal entries will Jay's Limo Services make to record this transaction?
A) $\begin{array}{|l|r|r|}
\hline \text { Dividends } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$
B) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Common Stock } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$
D) $\begin{array}{|l|r|r|}
\hline \text { Dividends } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$
E) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$

Question

Quizplus · Accepted Answer

When a company pays a dividend, it decreases its cash account (an asset) and increases its dividends account (which reduces retained earnings, an equity account). The correct journal entry debits Dividends and credits Cash, reflecting the outflow of cash and the recording of the dividend payment.

JSmith,the Sole Stockholder,received a $100 Dividend from Jay's Limo Services Dividends 100 Cash 100\begin{array}{|l|r|r|}\hline \text { Dividends } & 100 & \\\hline \text { Cash } & & 100 \\\hline\end{array} Dividends Cash ​100​100​​

JSmith,the Sole Stockholder,received a $100 Dividend from Jay's Limo Services $\begin{array}{|l|r|r|}\hline \text { Dividends } & 100 & \\\hline \text { Cash } & & 100 \\\hline\end{array}$