Which of the following is the journal entry to record the declaration of a stock dividend?

A. Debit Common Stock Dividend Distributable (number of shares * par value common stock); credit Common Stock (same)

B. Debit Common Stock Dividend Distributable (number of shares * market value common stock); credit Common Stock (same)

C. Debit Retained Earnings (market value * number of shares); credit Common Stock Dividend Distributable (number of shares * par value); credit Paid-In Capital in Excess of Par Stock Dividend (market value - par value) * number of shares

D. Debit Common Stock (number of shares * par value); credit Cash

Question

Journey Gonzales

Business

15 November, 10:56

Which of the following is the journal entry to record the declaration of a stock dividend?

A. Debit Common Stock Dividend Distributable (number of shares * par value common stock); credit Common Stock (same)

B. Debit Common Stock Dividend Distributable (number of shares * market value common stock); credit Common Stock (same)

C. Debit Retained Earnings (market value * number of shares); credit Common Stock Dividend Distributable (number of shares * par value); credit Paid-In Capital in Excess of Par Stock Dividend (market value - par value) * number of shares

D. Debit Common Stock (number of shares * par value); credit Cash

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Answers (1)

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Kristen · Answer 1

The correct answer is C. Debit retained earnings (market value * number of shares); Common stock credit where the dividends are distributed (number of shares * par value); Credit paid in capital in excess of par stock dividend (market value - par value) * number of shares.

In stock dividend there is no cash which is being involved, what is there is distribution of more and more shares of a certain corporation stock.

In this a corporation is not willing to lose anything but to give its stockholders something.