Killercrawley
29.10.2020 •
Business
Jen Rogers withdrew a total of $26,000 from her business during the current year. The entry needed to close the withdrawals account is:
a. Debit Income Summary and credit Dividends for $20,000.
b. Debit Retained Earnings and credit Dividends for $20,000.
c. Debit Dividends and credit Cash for $20,000.
d. Debit Dividends and credit Retained Earnings for $20,000.
e. Debit Income Summary and credit Cash for $20,000.
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Ответ:
b. Debit Retained Earnings and credit Dividends for $20,000.
Explanation:
The journal entry to record the withdrawals or dividends is:
Dr Dividends 20,000
Cr Cash 20,000
at the end of the year, you close the dividends account against retained earnings:
Dr Retained earnings 20,000
Cr Dividends 20,000
this entry reduces the company's equity since retained earnings has a normal credit balance.
Ответ: