Question

A company paid jen rogers, its sole stockholder, a total of $22,000 in dividends during the current year. the entry needed to close the dividends account is:

Answer 1

Retained earnings......................Dr $22,000

Dividend expense $22,000

Step-by-step explanation:

There are two accounts, temporary and permanent accounts. Temporary accounts such as dividends and revenue need to be closed and charged against permanent accounts at the end of reporting period. This is done to estimate the total earnings of the firm during the period.

Dividends are charged to permanent account, retained earnings. Following is the closing entry:

Particulars Debit Credit

Retained earnings $22,000

Dividend expense $22,000

(Dividends expenses closed

by charging to retained earnings)