Carne Manufacturing declared a 10% stock dividend when it had 200,000 shares of $5 par value common stock outstanding. The market price per common share was $15 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to:
A) Stock Dividends of $300,000.
B) Paid-in Capital in Excess of Par for $200,000.
C) Common Stock for $300,000.
D) Stock Dividends for $100,000.

Question

Quizplus · Accepted Answer

The entry to record the stock dividend declaration includes a credit to Common Stock for the par value of the new shares issued (10% of 200,000 shares = 20,000 shares at $5 par value = $100,000) and a credit to Paid-in Capital in Excess of Par for the excess of market value over par value (20,000 shares at $10 excess = $200,000).

Carne Manufacturing Declared a 10% Stock Dividend When It Had