Question

On april 1, rawlings declares a dividend of $0.30 per share. rawlings has 100,000 shares authorized, and 40,000 issued and outstanding. the date of record is april 28, and the payment date is may 15. which of the following entries is included in the journal entry on april 1?

multiple choice question.
A. credit cash $12,000.
B. credit dividends payable $30,000.
C. debit retained earnings $30,000.
D. debit retained earnings $12,000.

Answer 1

The correct entry for the journal on April 1 would be option C. debit retained earnings $30,000.

Step-by-step explanation:

The correct entry for the journal on April 1 would be option C. debit retained earnings $30,000.

When a company declares a dividend, it is obligated to debit its retained earnings account for the total amount of the dividend. In this case, the dividend declared is $0.30 per share and the outstanding shares are 40,000. Therefore, the total dividend amount is $30,000 ($0.30 x 40,000).

This journal entry reflects the reduction in the company's retained earnings as a result of declaring and setting aside funds for the dividend payment.