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    Ajrosh's Avatar
    Ajrosh Posts: 1, Reputation: 1
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    #1

    Sep 5, 2010, 02:25 PM
    How to pass Journal entry for Dividend payments ?
    Where we have a figure for Retained earnings already ,so shall we pass the payment of Dividends from retained earnings part?
    Awaiting your worthy reply - guy's
    :)
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Sep 5, 2010, 04:35 PM

    Depends on whether you really mean the "payment" or not. When the dividend is declared, it is debited to Cash Dividends** and credited to Dividends Payable. When it's later paid, it's debited back out of Dividends Payable and credited to cash, like any payment of a payable.

    **If this is for homework, some texts debit this directly out of Retained Earnings. If you debit it into Cash Dividends, you will have to do a closing entry at year-end that debits Retained Earnings and credits Cash Dividends.
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