ACCTNG 2400 1st Edition Lecture 14 Outline of Last Lecture I. Adjustments for DepreciationII. Contra-accountsIII. Deferral and accrual adjustmentsOutline of Current Lecture I. More on DividendsII. Order of statement preparation reviewIII. Temporary AccountsIV. Closing journal entriesCurrent LectureMore on dividends:- Dividends are NOT expenses. Instead, they are a reduction of the retained earnings- When dividends are declared, we debit stockholders equity account called “dividends declared”. If the dividend was paid immediately in cash, the journal entry would be:o dr Dividends declared (-SE) 10,000cr Cash (-A) 10,000More commonly, the dividend is not paid immediately in cash, because time is required to identify the stockholders to be paid. In this case, the journal entry would credit dividends payable instead of crediting the cash account.Order of Statement Preparation review:1. Income statement2. Statement of retained earnings3. Balance sheet4. Statement of cash flowsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Temporary Accounts and Closing journal entries:Temporary accounts: REVENUE, EXPENSE, DIVIDENDSClosing process: at end of the period, we transfer temporary accounts into retained earnings, account, and we zero out the temporary accounts.1. Debit revenue accounts and credit retained earnings2. Credit expense accounts and debit retained earnings3. Credit dividends declared and debit retained earningsZero out all three temporary accounts on the trial balance sheet – can do 2 or 3 entry
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