Jones Hardware,Inc.paid a cash dividend of $6,000.What is the necessary entry to record this transaction?
A)Debit Cash,credit Retained Earnings.
B)Debit Dividends,credit Cash.
C)Debit Common Stock,credit Cash.
D)Debit Cash,credit Common Stock.
E)Debit Cash,credit Dividend Income.

Question

Quizplus · Accepted Answer

When a company pays a dividend, it reduces the amount of cash on hand (debit dividends) and gives that cash to the shareholders (credit cash). Therefore, the necessary entry to record payment of a cash dividend is to debit dividends and credit cash.