Question

Alice co. owns 1,000 shares of ryder, inc. and classifies them as an equity investment with insignificant influence. on september 2, alice received $4,200 of cash dividends from ryder. the journal entry to record this transaction would include a credit to which account? a. gain on

b. sale of
c. investment
d. cash
e. dividend revenue

Answer 1

The correct entry for Alice Co. receiving a cash dividend involves crediting Dividend Revenue. This reflects the income from dividends, contributing to the income statement for the period.

correct answer is option e. dividend revenue

Step-by-step explanation:

The student has inquired about the correct journal entry to record a cash dividend received from an equity investment. When Alice Co. receives a dividend from Ryder, Inc., the journal entry to record this transaction will include a debit to Cash for the amount received ($4,200) and a credit to Dividend Revenue.

This entry reflects the income earned from the investment in the form of dividends, which increases the cash balance and likewise increases dividend revenue on the income statement. It's important to note that dividends are reported in the income statement as they are considered a return on the investment for the period in which they are declared.

The correct answer to the question is option (e) Dividend Revenue.