The board of Bogswell,Inc.declared a $2 per share cash dividend on common stock.The corporation has 4,000 shares of common stock outstanding.The entry required to distribute the dividend is:

Question

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The entry required to distribute the dividend is to debit Common Dividends Payable (a liability account) and credit Cash (an asset account) for the total amount of the dividend declared. Therefore, the correct entry is: Debit Common Dividends Payable $8,000 and Credit Cash $8,000. Option A is incorrect because Cash should be credited instead of debited. Option C is incorrect because Retained Earnings should not be credited since it is a stockholders' equity account, which is not affected by the declaration of dividends. Option D is incorrect because there is no account called "Cash Dividends".

The Board of Bogswell,Inc