Odessa Corporation had 20,000 shares of $2 par value common stock outstanding on July 1.On that day,the board of directors declared a 10% stock dividend when the market value of each share was $9.The stock dividend is to be distributed on July 20 to stockholders of record on July 10.The entry to record the issuance of the shares on July 20 is:
A)Debit Common Stock Dividends Distributable $18,000; credit Common Stock $18,000.
B)Debit Retained Earnings $18,000; credit Common Stock Dividends Distributable $4,000; credit Paid-In Capital in Excess of Par Value,Common Stock $14,000.
C)Debit Retained Earnings $18,000; credit Common Stock $4,000; credit Paid-In Capital in Excess of Par Value,Common Stock $14,000.
D)Debit Retained Earnings $18,000; credit Common Stock $18,000.
E)Debit Common Stock Dividends Distributable $4,000; credit Common Stock $4,000.

Question

Quizplus · Accepted Answer

The correct entry for issuing a stock dividend involves moving the value from Common Stock Dividends Distributable to Common Stock. Since it's a 10% dividend on 20,000 shares, 2,000 shares are issued at $2 par value, totaling $4,000.

Odessa Corporation Had 20,000 Shares of $2 Par Value Common