Question

Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,700 in dividends during the current year. The entry to close the dividends account at the end of the year is _______.

Answer 1

Answer:

The entry to record Dividend Paid will be;

Retained Earnings (Dr.) $5,700

Cash   (Cr.) $5,700

Explanation:

When the Castillo Services declares dividend it should record journal entry as  

Retained Earnings (Dr.) $5,700

Dividend Payable (Cr.) $5,700  

And when the Dividend is paid to its sole shareholder K. Castillo, the journal entry will be  

Dividend Payable (Dr.) $5,700

Cash   (Cr.) $5,700  

To now close the Dividend account at the end of the year it should record the adjusting entry as,

Retained Earnings (Dr.) $5,700

Cash   (Cr.) $5,700