On 15 December Northlake Nordic Centre Inc.’s board declares a cash dividend of $30,000, payable 15 January to shareholders of record 31 December. Record the declaration.
On 15 December Northlake Nordic Centre Inc.’s board declares a cash dividend of $30,000, payable 15 January to shareholders of record 31 December. Record the declaration.
Answer
Dr Dividends 30000; Cr Dividends Payable 30000
Accounts - Dividends - Dividends Payable - Cash - Retained Earnings - Dividend Expense The resolution creates the obligation: **Dividends** (debit) 30,000 — a temporary equity account closed to Retained Earnings — and **Dividends Payable** (credit), a current liability. Traps: **Cash** (nothing paid yet) and **Dividend Expense** (a distribution to owners is never an expense). A case may instead debit Retained Earnings directly — the same reduction of equity.
Hermanson Vol 1 ch 13 (the three dates — shape adapted; stock dividends and splits — recall only); Dauderis & Annand §10.3–10.4; OpenStax Financial Accounting 14.3 (cross-check) (concept map M3–M5)