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

Question

A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is:

a.) Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000.
b.)Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value, Common Stock $6,000.
c.) Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000.
d.) Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000.
e.) No entry is needed.

Explanation / Answer

b.)Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value, Common Stock $6,000.

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