s2 A stock dividend A will not change total stockholders\' equity B. will increa
ID: 2600639 • Letter: S
Question
s2 A stock dividend A will not change total stockholders' equity B. will increase retained earnings D. is accounted for like a tick split. E. will not change retained earnings 33. Which of the following is mot true about a 2-5or-1 stock split? A. Total stockholders' equity stays the same. B. Par value per share is reduced to half of what it was before the splis C. A stckholder with 100 shares before the split owns 200 shares after the split. D. The market price probably will decrease. E. Total contributed capital increases A corporation has 40,000 shares of S5 par value common stock outstanding. On October 17, the company declares a 10% stock dividend. The the stock dividend includes a: A. credit to Retained Earnings for $56,000. B. credit to Common Stock for $20,000. C. credit to Common Stock for $56,000. D. debit to Retained Earnings for $20,000. 35. A corporation had 50,000 shares of $20 par value common stock outstanding. The board of directors declared and issued a 50% stock dividend. The market value of the stock was S27 per share. The oumal entry to record this stock dividend includes a: A. debit to Retained Earnings of $675,000. B. credit to Common Stock of $675,000. C. debit to Retained Earnings of $500,000. D. credit Additional Paid-in Capital for $175,000. 36. On January 1, 2016 Jasper Company had Retained Earnings of $1,720,000. the following transactions: During the year, Jasper had Declared a 15% stock dividend of$365,000 Declared a cash dividend of $120,000 Declared 60% stock dividend of $ 1 86,000 - Announced a 2-for-1 stock split: 25,000 shares were issued when the value of the stock was $12 per share Earned net income of $820,000 - What is Jasper's ending Retained Earnings balance? A. $1,869,000 B. $2,420,000 C. $2,055,000 D. $1,569,000 E. $1,619,000Explanation / Answer
The correct answer is a stock dividend is accounted for like a stock split.
Under a Stock Dividend a company pays out stock to its shareholders .As a result the company’s shares outstanding increases by the amount of stock dividend and accordingly the share price decreases. To facilitate this arrangement a journal entry is passed which transfer the value of issued stock from retained earnings account to Paid up share capital account.
All other options are incorrect as stock dividend result in increase in total stockholder’s equity and decrease in retained earnings.
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