1. Eastline Corporation had 10,000 shares of $10 par value common stock outstand

Question

1. Eastline 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.

2. Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the dividend declaration is:

A. Debit Retained Earnings $104,500; credit Common Dividends Payable $104,500.

B. Debit Common Dividends Payable $104,500; credit Cash $104,500.

C. Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100.

D. Debit Common Dividends Payable $100,100; credit Cash $100,100.

E. Debit Retained Earnings $110,000; credit Common Dividends Payable $110,000.

Explanation / Answer

1 Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000. 2 Dividends payable = (190000-8000)*0.55= $100100 Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100.

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