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On July 15, 2012, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares. The dividend is to be paid on August 15, 2012, to shareholders of record on July 31, 2012.
-The effects of the journal entry to record the payment of the dividend on August 15, 2012, are to
A)decrease shareholders' equity and decrease liabilities.
B)decrease liabilities and decrease assets.
C)increase shareholders' equity and increase liabilities.
D)increase shareholders' equity and decrease assets.

Question

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On July 15, 2012, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares. The dividend is to be paid on August 15, 2012, to shareholders of record on July 31, 2012.
-The effects of the journal entry to record the payment of the dividend on August 15, 2012, are to
A)decrease shareholders' equity and decrease liabilities.
B)decrease liabilities and decrease assets.
C)increase shareholders' equity and increase liabilities.
D)increase shareholders' equity and decrease assets.

Quizplus · Accepted Answer

The payment of the dividend decreases liabilities (dividends payable) and decreases assets (cash).

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