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 $27 per share.What is the journal entry to record this stock dividend?
A)Debit Retained Earnings and credit Common Stock for $675,000.
B)Debit Retained Earnings and credit Common Stock for $500,000.
C)Debit Retained Earnings and credit Cash for $675,000.
D)No entry is made to record the stock dividend.

Question

Quizplus · Accepted Answer

Since this is a large stock dividend,the journal entry to record this stock dividend includes a debit to Retained Earnings and a credit to Common Stock for $500,000 (or 50,000 shares × 0.50 × par value of the shares issued of $20).

A Corporation Had 50,000 Shares of $20 Par Value Common