Final answer:
To record a dividend declaration of $11,500, the journal entry would debit Dividends and credit Dividends Payable, indicating an equity reduction and a new liability.
Step-by-step explanation:
When a company declares dividends, it is distributing a portion of its earnings to its shareholders. In accounting, this transaction is recorded in the journal entry to reflect the payout commitment made by the company. On June 30, if a company declares dividends of $11,500, the entry to record this would involve debiting Dividends and crediting Dividends Payable.
Journal Entry:
Date: June 30
Dividends $11,500
Dividends Payable $11,500
This journal entry is made because Dividends account represents the distribution of earnings to shareholders and is debited when declared because it represents a decrease in retained earnings. Dividends Payable is credited, indicating a liability that the company now owes to its shareholders since a payable is created.
for this question is: The journal entry to record the declaration of dividends would involve debiting the Dividends account and crediting the Dividends Payable account for the amount of dividend declared, which reflects the creation of a liability and the decrease in equity.