On January 15, 2014, a corporation paid a cash dividend that had been declared prior to the end of its previous fiscal year. The entry to pay the dividends includes a debit to

Question

Quizplus · Accepted Answer

The payment of dividends involves a decrease in cash, which is debited, and a decrease in dividends payable, which is credited. Therefore, the correct entry is dividends payable (credit) and cash (debit). The other options involve a debit or credit to retained earnings, which is not appropriate in this case.

On January 15, 2014, a Corporation Paid a Cash Dividend