Castillo Services paid K.Castillo,the sole shareholder of Castillo Services,$5,700 in dividends during the current year.The entry to close the dividends account at the end of the year is:
A)Debit Dividends $5,700; credit Cash,$5,700
B)Debit Retained earnings $5,700; credit Dividends $5,700
C)Debit Dividends $5,700; credit Retained earnings $5,700
D)Debit Retained earnings $5,700,credit Salary Expense $5,700
E)Debit Income Summary $5,700; credit Retained earnings $5,700

Question

Quizplus · Accepted Answer

The correct entry to close the dividends account involves debiting Retained Earnings and crediting Dividends. This reflects the reduction in retained earnings due to the payment of dividends.

Castillo Services Paid K