Q7: How do we account for a company when it actually pays the dividend to shareholders?
A:
When the company pays the dividend to its shareholders, it will reduce Dividends payable (liability) and Cash (Asset) (if the dividend is paid in cash to shareholders):
DR Dividends Payable $85m
CR Cash $85m
Dividends paid to shareholders: reduces a liability (DR) and reduces an asset (CR)
Also, see Martin’s videos Accounting When Company Pays the Dividend