J.Smith,the sole stockholder,received a $100 dividend from Jay's Limo Services.Which of the following general journal entries will Jay's Limo Services make to record this transaction?
A) $$\begin{array} { | l | r | r | }
\hline \text { Dividends } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$$
B) $$\begin{array} { | l | r | r | }
\hline \text { Cash } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$$
C) $$\begin{array} { | l | r | r | }
\hline \text { Common Stock } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$$
D) $$\begin{array} { | l | r | r | }
\hline \text { Dividends } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$$
E) $$\begin{array} { | l | r | r | }
\hline \text { Cash } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$$

Question

J.Smith,the sole stockholder,received a $100 dividend from Jay's Limo Services.Which of the following general journal entries will Jay's Limo Services make to record this transaction?
A) $$\begin{array} { | l | r | r | } 
\hline \text { Dividends } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$$
B) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$$
C) $$\begin{array} { | l | r | r | } 
\hline \text { Common Stock } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$$
D) $$\begin{array} { | l | r | r | } 
\hline \text { Dividends } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$$
E) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$$

Quizplus · Accepted Answer

When a company pays a dividend, it decreases its cash account (an asset) and increases its dividends (which reduces retained earnings, an equity account). The correct journal entry debits Dividends and credits Cash, reflecting the outflow of cash and the distribution to shareholders.

JSmith,the Sole Stockholder,received a $100 Dividend from Jay's Limo Services Dividends 100 Cash 100\begin{array} { | l | r | r | } \hline \text { Dividends } & 100 & \\\hline \text { Cash } & & 100 \\\hline\end{array} Dividends Cash ​100​100​​

JSmith,the Sole Stockholder,received a $100 Dividend from Jay's Limo Services $\begin{array} { | l | r | r | } \hline \text { Dividends } & 100 & \\\hline \text { Cash } & & 100 \\\hline\end{array}$