In: Accounting
At which date are dividends recorded in the General Journal?
Why is convertible debt called convertible debt?
Dividends payable are a liability to the company. Usually, a dividend is declared by the company before making the actual payment. Therefore, two general journal entries are recorded for the same. First on the date of declaration of dividend, and second on the date of actual payment of dividend.
1. Entry on the date of declaration of dividend
Retained earnings (Dr.)
Dividends payable (Cr.)
2. Entry on the date of payment of dividend
Dividends payable (Dr.)
Cash/Bank (Cr.)