Roe Corporation owns 2,000 shares of WRJ Corporation stock.WRJ Corporation has 25,000 shares of stock outstanding.WRJ paid $4 per share in cash dividends to its stockholders.The entry to record the receipt of these dividends by Roe is:
A)Debit Cash,$8,000; credit Debt Investments,$8,000.
B)Debt Debt Investment,$8,000; credit Cash,$8,000.
C)Debit Cash,$8,000; credit Dividend Revenue,$8,000.
D)Debit Unrealized Gain-Equity,$8,000; credit Cash,$8,000.
E)Debit Cash,$8,000; credit Unrealized Gain-Equity,$8,000.

Question

Quizplus · Accepted Answer

Roe Corporation received $8,000 in cash dividends from WRJ Corporation. This is an example of dividend income earned from an equity investment. Therefore, the entry to record the receipt of these dividends is a debit to Cash for $8,000 and a credit to Dividend Revenue for $8,000. The choice C is the best option as it follows the standard accounting principles.

Roe Corporation Owns 2,000 Shares of WRJ Corporation Stock