Journal Entry for Dividends

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Journal Entry for Dividends

Рет қаралды 56,016

Күн бұрын

This video shows how to record a journal entry when a company declares dividends.
If the company declares a cash dividend and immediately pays it, you debit the Dividends account and credit the Cash account.
If the company declares a cash dividend but does not immediately pay it, you debit the Dividends account and credit Dividends Payable. When the dividend is later paid out, you debit Dividends Payable and credit the Cash account.
The Dividends account is a temporary account and is therefore closed out to Retained Earnings at the end of the period. This closing entry decreases Retained Earnings (and thus, Stockholders' Equity).-
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Пікірлер: 28

@JamesRedden 5 жыл бұрын

I have my accounting exam tomorrow and I’ve been binge watching your vids. Needless to say I learned more today than my entire semester in that class, thank you🙏

@blackezi3 3 жыл бұрын

This is the best type of teaching... Teaching based on REALITY and not fantasy lol

@Edspira 3 жыл бұрын

Thanks!

@brianwhite5798 4 жыл бұрын

Just wanted to leave a quick note. I learned about dividends in during financial accounting in my undergrad. It was presented a little differently. For the declaration of dividends that were to be paid we were taught to debit retained earnings and then credit dividends payable. I just thought it was interesting that the concept presented here is different, however, the ending results are the same because of the closing entries to the dividends account.

@stellaliu2689 2 жыл бұрын

this video makes me totally understand dividents in journal entry....

@Edspira 2 жыл бұрын

😀

@arjunarun9174 Жыл бұрын

I thought when you declare a dividend you have to immediately reflect it in the retained earnings too?

@bmanq2234 3 жыл бұрын

Keep coming to your videos! Another thumbs up.

@Melki 5 жыл бұрын

Very engaging presentation and I got what I’m looking for from it. Thank you

@MyFinancialFocus 2 жыл бұрын

Love journal entries. Debts and credits make everything easier.

@sszoltan 5 жыл бұрын

Great video. Just one question: If you declare a dividend without immediate payment, do you add "Dividends Payable" in the Enterprise Value calculation?

@RenegadeMatrix 5 жыл бұрын

I am new to accounting and learning a lot here. Thank you very much for the explanations. If the company declares the dividend in Q3, but pays it in Q4, then for the Q3 entry, i would have entry 1. Debit dividend (temporary), credit dividend payable and 2. Debit Retained Earnings and Credit Dividend (temporary) to close off the declaration of the dividend. And only in the Q4 statement would I see the 3rd entry when the dividend is actually paid 3. Debit Dividends Payable, credit cash? Thanks again!

@Edspira 5 жыл бұрын

This is correct. You do the closing entry at the end of the period in which you declared the dividend. Good question!