A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to1. Retained Earnings. 2. A paid-in capital account. 3. Accumulated Depletion. 4. Accumulated Depreciation.

Answer: Option (2)

Explanation:

Paid in capital is referred to as or known as amount of the capital which is paid in by the investors during the preferred or common stock issuance, including par value of shares in addition to the amount in excess of the par value. The paid in capital tends to represent funds which are raised by organization through selling of equity.