Journal entry when dividends are declared?

Question

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Jarboe 0 Comments

Let’s say that a company declared dividends during the year. What are the journals that I need to post to record this transaction? Does it have to be a current liability?

1 Answer

score 0 · Answer 1 · 2012-12-02T16:37:22+00:00

When a dividend is declared, the following journals are posted:

Dr Reserves
Cr Dividends Payable

When the dividend is paid the journal is:

Dr Dividends Payable
Cr Cash

Please bear in mind that the ordinary dividends need to be declared and not simply proposed or promised for a journal to be posted.