On November 1, 2015, Elli Company declared a dividend of $3.00 per share. Elli C

Question

On November 1, 2015, Elli Company declared a dividend of $3.00 per share. Elli Company has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2015. On November 30, Elli made the following journal entry: A) Debit Retained Earnings $60,000 and credit Dividends Payable—Common $60,000. B) Debit Dividends Payable—Common $60,000 and credit Cash $60,000. C) Debit Cash $60,000 and credit Dividends Payable—Common $60,000. D) Debit Retained Earnings $60,000 and credit Cash $60,000.

Explanation / Answer

B) Debit Dividends Payable—Common $60,000 and credit Cash $60,000. Particulars Dr Amt Cr Amt On Nov 1 Entry would be   Retained Earnings Dr          60,000.00 To Dividend Payable                    60,000.00 On Nov 30 Entry would be   Dividend Payable Dr          60,000.00 To Cash                    60,000.00

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