On December 1, the board of directors of Buy & Large, Inc., declared a cash dividend of $2 per share on the 300,000 common shares outstanding on record at December 31, payable January 10 of the following year. No other dividends were declared in either year. Show the effect on the accounting equation of the entry to be recorded on December 1: What happened to liabilities?

A. Debit Dividends 600,000
B. Debit Common Stock 600,000
C. Debit Dividends Payable 600,000
D. 0 No Effect
E. Debit Cash 600,000
F. Credit Common Stock 600,000
G. Credit Paid-in Capital in Excess of Par 600,000
H. Credit Cash 600,000
I. Credit Dividends Payable 600,000
J. Debit Dividends and Credit Dividends Payable 600,000

Ans: I. Credit Dividends Payable 600,000