medium · Financial Accounting accounting-cycle-financial-statements
Aurora Logistics, Inc. declared and paid a $2,000 cash dividend during the period.
If the firm uses a temporary 'Dividends Declared' account, how is this account handled at the end of the accounting cycle?
- It remains on the post-closing trial balance as a contra-equity item
- It is closed directly into the firm's Income Summary clearing account for the period
- It is closed by a debit to Retained Earnings and a credit to Dividends Declared
- It is closed with a debit to Dividends Declared and a credit to the Cash account balance
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