On January 1, Swanson Corporation had 80,000 ordinary shares with a €10 par value outstanding. On March 17, the company declared a 15% share dividend to shareholders of record on March 20. Market value of the shares was €13 on March 17. The shares were distributed on March 30. The entry to record the transaction of March 30 would include a
A) credit to Cash for €120,000.
B) debit to Ordinary Share Dividends Distributable for €120,000.
C) credit to Share Premium-Ordinary for €36,000.
D) debit to Cash Dividends for €36,000.

Question

Quizplus · Accepted Answer

The entry to record the distribution of the share dividend involves debiting Ordinary Share Dividends Distributable for the par value of the additional shares issued, which is 12,000 shares (15% of 80,000) times the €10 par value, totaling €120,000.

On January 1, Swanson Corporation Had 80,000 Ordinary Shares with a €10