Answer (B) is correct . Dividends are recorded on their declaration date by a debit to retained earnings and a credit to dividends payable. The dividend is the amount payable to all shares outstanding. Treasury stock is not eligible for dividends because it is not outstanding. Thus, the December 1 entry is to debit retained earnings and credit dividends payable for $50,000 (50,000 * $1).

Answer (A) is incorrect because A liability should be recorded.
Answer (C) is incorrect because The treasury stock is not eligible for a dividend.
Answer (D) is incorrect because Paid-in capital is not affected by the declaration of a dividend.

Answer (C) is incorrect because The treasury stock is not eligible for a dividend.
Answer (D) is incorrect because Paid-in capital is not affected by the declaration of a dividend.