Ames Co. has 1,000,000 shares of common stock authorized with a par value of $3

Question

Ames Co. has 1,000,000 shares of common stock authorized with a par value of
$3 per share of which 600,000 shares are outstanding. Ames authorized a stock
dividend when the market value was $8 per share, entitling its stockholders to one additional share for each share held. The par vlaue of the stock was not changed. Assuming the declaration is not recorded separately, what entry, if any, should Ames make to record distribution of the stock dividend?

A) Retained Earnings................................ 4,800,000
Common Stock 1,800,000
Gain on Stock Dividends 3,000,000

B) Retained Earnings 1,800,000
Common Stock 1,800,000

C) Retained Earnings 4,800,000
Common Stock 1,800,000
Paid-In Capital from Stock Dividends 3,000,000

D) Memorandum entry noting the number of additional shares issued
as a dividend.

Explanation / Answer

B) Retained Earnings 1,800,000
Common Stock 1,800,000
Thank you....

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