Cash Dividend

When a cash dividend is declared, the board of directors specifies an amount that is to be paid per share to stockholders as of a specified record date on a specified payment date. On the date of declaration of a total dividend of $80,000, this journal entry would be recorded:

Cash Dividends journal entry

Alternatively, some accountants prefer to debit the temporary account known as Dividends Declared which is closed to Retained Earnings at year-end. On the date of payment, the entry would be made:


Cash Dividends journal entry

Many larger firms use a special checking account for disbursing cash dividends.

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