Hemingway Corporation has 100,000 shares of common stock issued and outstanding. At the meeting of the board of directors on December 1, 2015, the board voted to declare a cash dividend of $5 per share to be paid on December 31, 2015, to shareholders of record as of December 16, 2015. Complete the necessary journal entry for the declaration of the dividend by selecting the account names and dollar amounts from the drop-down menus.

Retained earnings A/c Dr $500,000       (100,000 shares × $5)

          To Dividend payable A/c $500,000

(Being the dividend is declared)

Explanation:

The journal entry is shown below:

Retained earnings A/c Dr $500,000       (100,000 shares × $5)

          To Dividend payable A/c $500,000

(Being the dividend is declared)

For recording this we debited the retained earning as it reduced the stockholder equity and at the same time it increased the liabilities so dividend payable is credited

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