What is the journal entry to record when a cash dividend is paid to shareholders?
When a cash dividend is paid to shareholders, this is known as the payment date. This is the date when the actual cash is transferred from the company to the shareholders. Since the dividend liability was previously recorded on the dividend declaration date, then the entry would be to debit dividend payable and credit cash (for the cash outflow).
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What is the journal entry to record a dividend payable?
As soon as the Board of Directors approves and announces a dividend (on the declaration date) , the company must record a payable in the liability section of the balance sheet. Cash dividends are paid out of the company’s retained earnings, so the journal entry would be a debit to retained earnings and a credit […]
What is a dividend?
A dividend is when a company distributes profits to its shareholders. Typically, dividends are in the form of cash and are distributed when the company has excess cash that is not reinvested into the business. A company can also issue a stock dividend or property dividend.