[nib]

hello friends,

In cash basis accounting what j/e passed on declaration and payment of dividend ?
are these entries same as ACCRUAL basis or different?

[Gary]

Logically I feel like you would do nothing on the declaration date because its cash basis.

Once you pay the dividend:

DR. Retained Earnings
CR. Cash

I'm not sure if that's correct, so please correct me if I'm wrong, because this could be very helpful com

AUD 8/18/16
FAR 11/16
BEC 1/17
REG 2/17

[Anonymous]

Found this on Google, page 14 has a cash-basis dividend entry in the second-to-last line of the table (it's not written as a JE, but you can see the JE from it):
https://www.swlearning.com/ibc/warren/pdf/Warren_c02.pdf

As a general rule, when trying to think of what entries would/should be made under cash basis, think of it like this: If there's not a cash account included in the entry, then don't make it under cash basis. There may be some exceptions, but if you keep that in mind as you're thinking through problems, it helps with a lot. So, under accrual, on the date of declaration you'd have a JE with no cash account (the accounts would be something like Dividends Payable and Retained Earnings), then on the date of payout you'd have a JE with a cash account (Dividends Payable and Cash); that means under cash accounting you're not going to have the first JE, and going to have to get all the information that you need into the JE at payout date (so, it'd be Retained Earnings and Cash). The cash-basis JE doesn't exactly match either JE for accrual; it just takes 1/2 of one accrual JE and 1/2 of the other and sticks them together.

[Author]

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