Question

the company paid dividends of $3,400. which of the following is the journal entry the company should record?
a.
dividends 3,400
cash 3,400
b.
common stock 3,400
cash 3,400
c.
dividends 3,400
fees earned 3,400
d. no entry is required.

Explanation:

When a company pays dividends, the Dividends account is debited (increased) to record the distribution, and Cash is credited (decreased) as cash is paid out. Option a shows Dividends debited for $3,400 and Cash credited for $3,400, which matches the journal entry for dividend payment. Option b involves Common Stock, which is incorrect for dividends. Option c uses Fees Earned, which is unrelated to dividends. Option d is wrong as a journal entry is required for dividend payment.

Answer:

a. Dividends 3,400; Cash 3,400