On Mar 3, Lyons Company paid dividends of $1,000. Use your knowledge of what a correct journal entry should look like to identify what would be included. (Check all that apply.)

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Chaya Fritz

Business

30 December, 20:55

On Mar 3, Lyons Company paid dividends of $1,000. Use your knowledge of what a correct journal entry should look like to identify what would be included. (Check all that apply.)

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Persy · Answer 1

Dividends should be debited on the left of the account and the cash shall be credited on the right side of the account by the same amount.

Explanation:

Dividends are the amount that are paid to the shareholders of a business organisation by the owner of the organisation. Dividends are a part of the profit only and are obviously paid when the company earns a profit in a particular year.

The dividends on the account of the company should be debited and therefore will appear on the left side of the table. To equalize and nullify the effect of it in case of the double entry system of accounting, cash shall be credited and therefore should appear on the right side of the table by the same amount as that of the dividends.