Question

Boston Enterprises declared and paid a dividend of $10,000 this year. The entry to close the Dividend at the end of the year will include a debit to: Multiple Choice O Dividends and a credit to Retained Earnings for $10,000. Dividends and a credit to Dividends Payable for $10,000. O Dividends and a credit to Cash for $10,000. Retained Earnings and a credit to Dividends for $10,000,

Answer 1

The correct answer is "Debit to Retained earnings and a credit to Dividends for $10,000".

Supporting explanations:

Dividends always has debit balance and it is a temporary account that needs to be closed on every accounting period so in order to close the dividends, the negative impact should be given and this can only be given by crediting the dividends. Dividends are paid from the existing and current profits, simply called the retained earnings so it is debited to retained earnings.

Therefore, to close dividends, a debit should be given to retained earnings and a credit should be given to dividends with the amount of dividends.

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The correct answer is "Common Stock".

Supporting explanations:

Common Stock is the total amount that is invested in the business through common shares and it is always has credit balance so when common stock is reported either in the unadjusted trial balance or in the adjusted trial balance, it is always reported under Credit balance only.

Therefore, the correct answer is Common Stock.

The remaining options like accounts receivable and equipment are the assets that always has debit balance and dividends are the expenses so it always has debit balance.