A corporation had 50,000 shares of $20 par value common stock outstanding July 1

Question

A corporation had 50,000 shares of $20 par value common stock outstanding July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record this dividend is:
A. Debit reatined earnings $135000;credit common stock dividend distributable $135000
B.Debit retained earnings $135000;credit cash $135000
C. debit retained earning $135000; credit common stock dividend distributable $100000;credit paid-in capital in excess of par value, common stock $35000.
D.debit retained earning $100000;credit common stock dividend distributable $100000
E. No entry is made until the stock is issued.

Explanation / Answer

C. debit retained earning $135000; credit common stock dividend distributable $100000;credit paid-in capital in excess of par value, common stock $35000.

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