Final answer:
A debit to dividends payable and a credit to dividends is the journal entry to record the declaration of a dividend.
Step-by-step explanation:
When recording the declaration of a dividend, the journal entry would be a debit to Dividends (or Retained Earnings) and a credit to Dividends Payable.
This entry reflects that the company has declared a dividend that will be paid to shareholders, which reduces the company's retained earnings and creates a liability to pay the specified amount to shareholders.
Steps to Record a Dividend Declaration
Debit the Dividends account (decreasing equity) or Retained Earnings (if using a Retained Earnings-Dividends account).
Credit the Dividends Payable account (increasing liability).
These entries ensure that the company's financial statements accurately reflect the declaration of dividends and the obligation to pay them in the future.