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.Roe's entry to record the receipt of these dividends is:
A)Debit Cash,$8,000; credit Long-Term Investments,$8,000.
B)Debt Long-Term 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 Interest Revenue,$8,000.

Question

Quizplus · Accepted Answer

The entry to record the receipt of cash dividends is to debit Cash for the amount of $8,000 and credit Dividend Revenue for the same amount. This reflects the increase in cash and revenue for the company. Option A is incorrect as Long-Term Investments will only be credited when the shares are sold. Option B is incorrect as it debits Long-Term Investments instead of Cash. Option D is incorrect as Unrealized Gain-Equity is not relevant in this scenario. Option E is incorrect as Interest Revenue is not applicable to cash dividends.

Roe Corporation Owns 2,000 Shares of WRJ Corporation Stock