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paid a cash dividend of $800 to shareholders. How do I journalize this? there is no...

paid a cash dividend of $800 to shareholders.

How do I journalize this? there is no 'dividend expense' under the selection. What is an alternative for:

Dividend expense $800

Cash $800

would it be under RE?

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Answer #1

Yes. Dividends are sharing or distributions of earnings by a corporation to its stockholders. Since dividends are the means whereby the owners of a corporation share in its earnings, accountants charge them against retained earnings. A dividend paid by a corporation is a distribution of profits to the owners of the corporation. The owners of a corporation are known as stockholders or shareholders. A corporation's board of directors, which is elected by the stockholders, decides if a cash dividend is needed. The considerations for paying or not paying a dividend include the stockholders' wishes, the stock market's reaction, and the corporation's needs and opportunities for cash in the present and in the future. Hence, correct entry is as below:

Retained Earnings...Dr.  $800

Cash....Cr. $800

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