Fischers, Inc. paid $1,200 of dividends. The journal entry would require:

Question

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When a company pays dividends, it reduces its cash balance (since it is paying cash out to its shareholders). Therefore, the entry would require a debit to Dividends (since it is an expense) and a credit to Cash (since it is an asset being reduced). Option A is the reverse of this entry and is incorrect. Option C involves accounts payable, which would not be relevant when paying dividends. Option D is also incorrect as it involves debiting accounts payable for payments made to shareholders, which is not accurate.