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Stock Dividend Journal Entry

A 35% stock dividend was declared on October 2 by the board of directors of a corporation to shareholders of record on October 20 payable on November 10. The closing market price of the stock on October 2 was $18. The corporation currently has the following items on its Stockholder's Equity section (all dollar amounts):
Common Stock ($2 Stated value) - 2,000,000
Paid in Capital in excess of par - 3,000,000
Retained Earnings - 4,000,000
Total Stockholder's Equity - 9,000,000

Which journal entry would be recorded on the declaration date of a stock dividend?

A.
Retained Earnings 700,000
Paid in Captial in excess of stated value 700,000

B.
Retained Earnings - 700,000
Common Stock Dividends Distributable - 700,000

C.
Retained Earnings - 3,600,000
Common Stock - 3,600,000

D.
Common Stock Dividends Distributable - 700,000
Paid in Captial in excess of stated value - 700,000

Solution Preview

The entry will be option 'B'.

The company is issuing 35% stock dividend. Which means ...

Solution Summary

The stock dividend journal entries are examined. The paid in capital excess of par are given.

$2.19