Q45. Cash dividend
(1) On January 10, 20×1, Entity A declared a $1.50 per share cash dividend on 500,000 shares of common stock.
(2) On February 10, 20×1, Entity A paid $750,000 cash dividend declared on January 10, 20×1.
Prepare journal entries to record these transactions.
A45. Cash dividend decreases retained earnings.
(1) January 10, 20×1: to record the cash dividend declared
| Debit | Credit | |
| Retained earnings (or cash dividend) | 750,000 | |
| Dividends payable | 750,000 |
[Note]
500,000 shares x $1.50 = $750,000
(2) February 10, 20×1: to record the payment of cash dividend
| Debit | Credit | |
| Dividends payable | 750,000 | |
| Cash | 750,000 |
[Note]
Decrease in dividends payable (liability): debit