At year-end, the Board of Directors of Mega Motors Ltd declared a final dividend of 4c per share on 80 000 ordinary shares. Early in the next year, the dividend was paid. Which of the following is the general journal entry to record the payment of the dividend?

Question

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The payment of the dividend is recorded by debiting the final dividend payable account to reduce it to zero, and by crediting the bank account to show that the payment has been made. Retained earnings are not affected by the payment of the dividend, so options A and B are incorrect. Option D is also incorrect as it reverses the debit and credit entries. Therefore, the correct answer is C.

At Year-End, the Board of Directors of Mega Motors Ltd