Question & Answer: A wide range of source documents for transactions provide the financial documentation and verification for posting acc…..

A wide range of source documents for transactions provide the financial documentation and verification for posting accounting entries. Select the best example of the transaction entry in which the source document is the July 14th board of directors’ minutes stating dividends are to be paid on August 15th.

A. Debit retained earnings and credit dividends payable.

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B. Debit inventory and credit cash.

C. Debit cash and credit accounts receivable.

D. Debit interest payable and credit cash

Expert Answer

Dividends declared journal entry is

Debit retained earnings and credit dividends payable.

when paid entry is

Debit Dividends payable and credit cash

So the option is A.Debit retained earnings and credit dividends payable.

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