Question

On April 22, the board of directors for Cosmic Candy, Incorporated declared a cash dividend of $1 per share payable to stockholders of record on May 15. The dividends are paid on June 8. The company has 1,000 shares of stock outstanding. Prepare the appropriate journal entry that will be recorded on June 8.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

Dividends payable Dr, $1,000

(1,000 shares × $1)

To Cash $1,000

(Being payment of cash dividend is recorded)

Therefore, for recording the payment of cash dividend we simply debited the Dividends payable as decreases the liability and credited the cash account as it decreasing the assets.