On December 31,as a short-term investment,Arlington and Fry purchased 500 shares for $50,000.The shares pay a $0.40 cash dividend on February 28.The entry to record the dividend would be:
E) No entry

Question

Quizplus · Accepted Answer

The entry to record the dividend would be to debit Cash Dividends Receivable for $200 (500 shares x $0.40 per share) and credit Dividend Income for $200. This reflects the fact that the company has not yet received the cash, but has a right to receive it based on their ownership of the shares.

On December 31,as a Short-Term Investment,Arlington and Fry Purchased 500