Asked by
Olivia Wallis
on Nov 15, 2024
Verified
Which of the following is the journal entry to record the declaration of a stock dividend?
A) Debit Common Stock Dividend Distributable (number of shares × par value common stock) ; credit Common Stock (same)
B) Debit Common Stock Dividend Distributable (number of shares × market value common stock) ; credit Common Stock (same)
C) Debit Retained Earnings (market value × number of shares) ; credit Common Stock Dividend Distributable (number of shares × par value) ; credit Paid-In Capital in Excess of Par Value Stock Dividend (market value - par value) × number of shares
D) Debit Common Stock (number of shares × par value) ; credit Cash
Retained Earnings
The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.
Common Stock Dividend Distributable
A liability account on the balance sheet representing a declaration of dividends by a company's board of directors that have not yet been paid out to shareholders.
Paid-in Capital
Funds received by a company in exchange for its stock, representing the equity capital contributed by shareholders.
- Familiarize oneself with the accounting processes applicable to stock dividends.
Verified Answer
AK
Learning Objectives
- Familiarize oneself with the accounting processes applicable to stock dividends.