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enfloran
Jan 25, 2009, 02:13 AM
How to record dividends transactions
hamzashakaa
Jan 25, 2009, 03:01 AM
Assume that you are the company who will issue a cash dividends. Upon declaration of the cash dividinds you should debit retained earnings and credit dividinds payable. And When you pay the dividinds you should debit dividinds payable and credit cash.
enfloran
Jan 25, 2009, 03:16 AM
Assume that you are the company who will issue a cash dividends. Upon declaration of the cash dividinds you should debit retained earnings and credit dividinds payable. And When you pay the dividinds you should debit dividinds payable and credit cash.

Thanks, I already posted the same question with what I think is the appropiate Journal Entry, I comapre with your answer, we agree, the only difference is I used dividends as a Retained Earnings contra-account instead of Retained Earnings. I do so to show what causes the change on the Retained Earnings.

Comments
hamzashakaa
Jan 25, 2009, 06:39 AM
Yes you are right it should be a contra account.