Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share)resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries?
A)He made no entry because the controller was correct.
B) APIC-Common Stock 1,700,000
C) Common Stock 1,700,000
D) Common Stock 1,700,000

Question

Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share)resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries?
A)He made no entry because the controller was correct. 
B) APIC-Common Stock 1,700,000 
C) Common Stock 1,700,000 
D) Common Stock 1,700,000

Quizplus · Accepted Answer

The Answer of Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share)resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries?
A)He made no entry because the controller was correct. 
B) APIC-Common Stock 1,700,000 
C) Common Stock 1,700,000 
D) Common Stock 1,700,000

Austin Motor Works Declared a 5% Stock Dividend in 2016