Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

A) A debit to retained earnings and a credit to cash.
B) A debit to additional paid-in capital and a credit to dividends payable.
C) A debit to cash and a credit to retained earnings.
D) A debit to retained earnings and a credit to dividends payable.

Dividend Declaration

The announcement by a company's board of directors of a payment to shareholders, distributed from its earnings.

Retained Earnings

What remains of the company's net earnings after dividend payments to shareholders have been made.

Dividends Payable

A liability on the company's balance sheet that indicates the amount of dividends declared by the board of directors but not yet paid to shareholders.