Accruing Dividends Payable

If your business is a corporation, and your corporation has declared a dividend payable to shareholders, the declared dividend needs to be recorded on the books. Assuming the dividend will not be paid until after year end, an adjusting entry needs to be made in the general journal.


Your corporation declares a dividend of $1.00 a share on December 31, 2001. There are 10,000 shares of common stock outstanding. The dividend will be paid on January 15, 2002. Make the following adjusting entry:


Debit Credit
Retained earnings 10,000
Dividends payable
To record dividends payable as of 12/31/2001