Super Retail declared dividend $200000 and paid dividend $150000 on 30 June 2019. Prepare...

Question:

Super Retail declared dividend $200000 and paid dividend $150000 on 30 June 2019.

Prepare journal entries.

Dividend Declaration and Payment:

The dividend is the term for the funds distributed from the earnings of the company. Although the total earnings of the company belong to the common stockholder, only a portion of these earnings are distributed as dividends, The remaining portion is retained for the business.

Answer and Explanation:


Journal entries in the books of accounts for dividend declaration and payment are as follows:


Date Account Title Debit ($) Credit ($)
June 30, 2019 Retained earnings $200,000
Dividend payable $200,000
(to record declaration of dividend)
June 30, 2019 Dividend payable $150,000
Cash $150,000
(to record payment of dividend in cash)

The closing balance in the dividends payable account will be $50,000 ($200,000 - $150,000)


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Cash Dividends & Dividend Payment

from Finance 101: Principles of Finance

Chapter 16 / Lesson 1
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