On September 20,2014,Shunt Corporation declared the distribution of the following dividend to its stockholders of record as of September 30,2014:
•Investment in 100,000 shares of Ramen Corporation stock,carrying value $600,000; fair market value on September 20,$1,450,000; fair market value on September 30,$1,575,000.
The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

Question

Quizplus · Accepted Answer

The debit to Retained Earnings would be for the carrying value of the investment, which is $600,000. The increase in fair market value would result in an increase in the value of the property dividend distributed to stockholders, but it would not affect the entry to record the declaration of the dividend. Therefore, the correct answer is B) $1,450,000.

On September 20,2014,Shunt Corporation Declared the Distribution of the Following