13. On February 28, 2017 Hill\'s Corporation. Common shares were selling for S35

Question

13. On February 28, 2017 Hill's Corporation. Common shares were selling for S35 and the shareholders' equity section of the corporation's balance sheet appeared as follows: Share capital: 100,000 Common shares authorized, 75,000 shares issues and outstanding. 2,475.000 567.000 $3,042.000 Retained Earnings Assume the company declares a 30% stock dividend on March 1st, to shareholders of record on March 15th, to be distributed on March 31st. The journal entry to be recorded on March 1st is: a. Dr. Retained Earnings 787,500 Cr. Cash 787,500 b. Dr. Retained Earnings 787,500 Cr. Common Shares Dividends Distributable 787,500 c. Dr. Retained Earnings 22,500 Cr. Common Shares 22,500 d. Dr. Retained Earnings 75,000 Cr. Common Shares Dividends Distributable 75,000 e. None of the above

Explanation / Answer

Amount of stock dividend = 30% * 75000 * $35 = $787500

At the time of declaration of dividend retained earnings account is debited and stock dividend distributable account is credited.

Option b is correct.

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