A corporation had 14,000 shares of $10 par value common stock outstanding when t

Question

A corporation had 14,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 5,320 shares. At the time of the stock dividend, the market value per share was $20. The entry to record this dividend is:

a.) Debit Retained Earnings $53,200; credit Common Stock Dividend Distributable $53,200

b.) No entry is needed

c.) Debit Retained Earnings $106,400; credit Common STock Dividend Distributable $53,200; credit Paid in Capital in Excess of Par Value, Common Stock $53,200

d.) Debit Common Stock Dividend Distributed $106,400; credit Retained Earnings $106,400

e.) Debit Retained Earnings $106,400; credit Commong Stock Dividend Distributable $106,400.

Must explain the answer in order to receive full credit.

Explanation / Answer

c.) Debit Retained Earnings $106,400; credit Common STock Dividend Distributable $53,200; credit Paid in Capital in Excess of Par Value, Common Stock $53,200

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