How do you record a dividend payment to stockholders?

Definition of Dividend Payment to Stockholders

A dividend payment to stockholders is usually a cash payment which reduces the corporation's asset cash and the corporation's stockholders' equity. There are actually two steps required for a corporation to make a dividend payment:

The corporation's board of directors must declare the dividend, and
The corporation must distribute the cash

Example of Recording a Dividend Payment to Stockholders

On the date that the board of directors declares the dividend, the stockholders' equity account Retained Earnings is debited for the total amount of the dividend that will be paid and the current liability account Dividends Payable is credited for the same amount. (Some corporations will debit the temporary account Dividends instead of debiting Retained Earnings. Then at the end of the year, the Dividends account is closed to Retained Earnings.)

The second entry occurs on the date of the payment to the stockholders. On that date the current liability account Dividends Payable is debited and the asset account Cash is credited.

(Assets + Expenses = Liability + Owners' Equity + Income)

Ref: https://www.accountingcoach.com/blog/recording-dividend-payment

All You Need To Know About Debits and Credits Summarized In One Sentence: Enter an amount in the Normal Balance Side of an Account to Increase the Balance of an Account and in the Opposite Side of an Account to Decrease the Balance of an Account. Additional Clarification: Since Assets, Draw, and Expense Accounts normally have a Debit Balance, in order to Increase the Balance of an Asset, Draw, or Expense Account enter the amount in the Debit or Left Side Column and in order to Decrease the Balance enter the amount in the Credit or Right Side Column. Likewise, since Liabilities, Owner's Equity (Capital), and Revenue Accounts normally have a Credit Balance in order to Increase the Balance of a Liability, Owner's Equity, or Revenue Account the amount would be entered in the Credit or Right Side Column and the amount would be entered in the Debit or Left Side column to Decrease the Account's Balance. Ref: http://www.dwmbeancounter.com/tutorial/DrCrTChart.html