Do Cash Dividends Decrease Retained Earnings
The Effect Of Cash Dividend On Retained Earnings Yes, cash dividends decrease Retained Earnings Account as it is paid out of it to stockholders or shareholders of the company or the corporation. In fact, Dividend is a Contra Equity Account and it is closed to retained earnings account. Retained earnings is a part of equity account. The positive, normal or usual balance of dividend is on debit side while the normal balance of retained earnings is on credit side in retained earnings t account, so dividend is deducted from the retained earnings account. The journal entry to close or transfer dividend account to retained earnings account is shown below: Retained Earnings a/c XXX ...