A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Question

Woodard

Business

24 January, 19:42

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

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Marlene Hebert · Answer 1

Common dividend payable A/c Dr $12,000

To Cash A/c $12,000

(Being the dividend is paid)

Explanation:

The journal entry is shown below:

Common dividend payable A/c Dr $12,000

To Cash A/c $12,000

(Being the dividend is paid)

The computation is shown below:

= Number of common shares * cash dividend per share

= 12,000 common shares * $1 per share

= $12,000

Since the common dividend payable is a liability account so we debited it and since the payment is made which reduces the cash balance so we credited it