The dividends declared and paid by a “X” corporation to its shareholders affect its financial position as follows:

Answer option (B)  >>>>>>>>>  Decrease retained earnings and decrease cash

Dr. Retained earnings

     Cr. Dividends payable - (accrual as shareholders need to approve the dividends proposed)

Recognition of the dividends proposed by directors y/end2014

Upon shareholder approval and authorisation of the financial statements at the AGM; the dividends are paid out: the entries are:

Dr. Dividends payable

     Cr. Bank

Payment of dividends declared2014

CONCLUSION:  (B) is the correct answer

The answer Is (B) Decrease retained earnings and decrease cash

ans .B

Correct answer is: B 

B is correct answer..............

Option (b) may fit as correct answer.