Explanation Journal entry : Journal is the primary record of the business transaction in chronological (date wise) order. Journal entry contains two effects one is debit and other is credit, under double entry book keeping system. Procedure for debiting and crediting an account: Increase in assets account, increase in expenses account, and decrease in liabilities account should be debited. Decrease in assets account, increase in revenue account, and increase in liabilities account should be credited. All transactions affect the accounting equation that is displayed below. The accounting equation should always remain in balance at the time of recording a business transaction: Adjusting entries : Adjusting entries refer to those entries that are reported at the end of the year to adjust the financial position of a firm based on the accrual basis of accounting. Option d: As per the given condition in the question, the company is required to prepare three separate journal entries. Prepare the journal entry for cash dividend as shown below. Date Particulars Debit ($) Credit ($) Dec 15 Dividend 1,600,000 Dividends payable 1,600,000 (To record the payment of cash dividend) Table 1 Prepare the journal entry for closed retained earnings as shown below. Date Particulars Debit ($) Credit ($) Dec 15 Retained earnings 1,600,000 Dividend 1,600,000 (To record the closed retained earnings) Table 2 Prepare the journal entry for stock split as shown below...

2nd Edition

ISBN: 9780134730370

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Chapter 4, Problem 4.10MC

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To identify: The correct option.

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Solution Summary: The author explains that the correct option is c. All transactions affect the accounting equation that is displayed below.

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