Answer:
Upon declaration;
Retained earnings Dr $229440000 ($1.20×191200000)
Dividend payable Cr $229440000
Upon payment of dividends;
Dividend payable Dr $229440000
Cash/Bank Cr $229440000
Explanation:
There are two things to remember when dealing with the treatment of dividends.
First of all, a dividend is proposed by the BOD (board of directors) usually in an AGM (annual general meeting), after the proposal is made a certain amount of dividend per share is agreed amoung the BOD and finally declared. Until the declaration of dividend no journal entry is made.
Secondly once it's declared the company liable to pay it records it as a liability. Remember dividend is only paid to issued shares (i.e shares held by shareholders) which in this case is 191200000.
So the first entry upon declaration is;
Retained earnings Dr $229440000 ($1.20×191200000)
Dividend payable Cr $229440000
We debit retained earnings because upon declaration we create a liability but it's not paid right now.
Upon payment of dividends;
Dividend payable Dr $229440000
Cash/Bank Cr $229440000
Upon payment (settlement of liability) we reduce liability and reduce cash.
