Q. Show Recording changes in dividends?
Recording changes in dividends ever since dividends decrease retained earnings increases appear on the left side of the Dividends account and diminish on the right side. Therefore the firm records payment of a USD 2000 cash dividend as follows
At the last part of the accounting period the accountant transfers any balances in the expense and revenue and Dividends accounts to the Retained Earnings account. This transfer take place only after the information in the expense and revenue accounts has been used to prepare the income statement. We illustrate and discuss this step in section 4. To resolve the balance of any T-account total the debits to the account total the credits to the account and deduct the smaller sum from the larger. If the total of the debits exceeds the sum of the credits the account has a debit balance. For illustration the following Cash account uses information from the preceding transactions. The account contained a debit balance of USD 13400 computed as total debits of USD 16000 less total credits of USD 2600.