A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to
A) Retained Earnings.
B) a paid-in capital account.
C) Accumulated Depletion.
D) Accumulated Depreciation.

Question

Quizplus · Accepted Answer

A liquidating dividend is a return of capital to shareholders, so the declaration would involve a debit to a paid-in capital account, reducing the company's equity.

A Mining Company Declared a Liquidating Dividend