The equity section of Manning Company as of December 31, 2017 follows:
$$\begin{array} { | l | r | }
\hline \text { Camman stock (11,000 shares issued (? \$6 par) } & \$ 6 6 , 0 0 0 \
\hline \text { Additional paid-in capital (Comman stock) } & 100,000 \
\hline \text { Retained earnings } & 6 0 , 0 0 0 \
\hline \text { Less: Treasury stack (1,000 shares (@ \$12) } & ( 12,000 ) \
\hline \text { Total shareholders' equity } &\$ 2 1 4 , 0 0 0 \
\hline
\end{array}$$
The company declares and distributes a 3 percent stock dividend on the outstanding shares. The market price of the stock is $85 per share. The journal entry to record the stock dividend would include:

Question

The equity section of Manning Company as of December 31, 2017 follows:
$$\begin{array} { | l | r | } 
\hline \text { Camman stock (11,000 shares issued (? \$6 par) } &  \$ 6 6 , 0 0 0  \
\hline \text { Additional paid-in capital (Comman stock) } & 100,000 \
\hline \text { Retained earnings } & 6 0 , 0 0 0 \
\hline \text { Less: Treasury stack (1,000 shares (@ \$12) } & ( 12,000 ) \
\hline \text { Total shareholders' equity } &\$ 2 1 4 , 0 0 0  \
\hline
\end{array}$$
The company declares and distributes a 3 percent stock dividend on the outstanding shares. The market price of the stock is $85 per share. The journal entry to record the stock dividend would include:

Quizplus · Accepted Answer

CTo record a stock dividend, the company would debit the Stock Dividends account and credit the Common Stock and possibly Additional Paid-In Capital accounts, depending on the size of the dividend and the par value of the stock. In this case, with a 3% stock dividend on 11,000 shares, 330 shares are issued. At a $6 par value, the credit to Common Stock would be 330 shares * $6 = $1,980 (rounded to the nearest hundred as per the question's formatting, it should be $1,800, acknowledging a potential typo or rounding in the question). The remainder of the dividend value, based on the market price, would be credited to Additional Paid-In Capital or a similar account, not debited, and the total value of the dividend would be 330 shares * $85 market price = $28,050, not the amounts listed in options A or D. Therefore, the correct entries involve crediting Common Stock for the par value of the shares distributed and debiting Stock Dividends for the total market value of the shares distributed.

The Equity Section of Manning Company as of December 31