Aaron Company plans to issue a large stock dividend. In accounting for this tran

Question

Aaron Company plans to issue a large stock dividend. In accounting for this transaction, what effects occur to the contributed capital section of stockholders' equity?

A. Common stock increases by the number of dividend shares x par value per share, and retained earnings decreases for the same amount
B. Retained earnings increases by the number of dividend shares x par value per share, and additional paid-in capital increases for the balance
C. Common stock increases by the number of dividend shares x par value per share, and retained earnings increases for the balance
D. Common stock increases by the total market value of the dividend

Explanation / Answer

d

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