A company issues a 4 % stock dividend when the price of the stock was $6 per share.The company has 20 million common shares outstanding prior to the stock dividend.How would the company account for this stock dividend?

Question

Quizplus · Accepted Answer

The company would issue 800,000 shares (20 million x 4%) as a stock dividend. The total par value of the stock dividend would be $4,800,000 (800,000 x $6). The company would debit the stock dividend distributable account for $4,800,000 and credit the common stock account for $4,800,000.

A Company Issues a 4 % Stock Dividend When the Price