Wallendo Corporation issued 5,000 shares of its $1 par value common stock as a stock dividend when the shares were selling for $10 per share. At the time of the dividend, Wallendo had 100,000 shares of common stock outstanding. These shares were originally issued for $5 per share. The entry to record the stock dividend includes a debit to Retained Earnings for:

Question

Quizplus · Accepted Answer

The stock dividend is recorded at the market value of the shares at the time of the dividend. Therefore, the debit to Retained Earnings is 5,000 shares x $10 market value per share = $50,000.

Wallendo Corporation Issued 5,000 Shares of Its $1 Par Value