The entry to record the distribution of the stock dividend would include:

Question

Quizplus · Accepted Answer

A stock dividend involves a debit to Retained Earnings (or a similar equity account) and a credit to Common Stock Distributable (a temporary equity account) at the time of declaration. Later, when the dividend is issued, Common Stock Distributable is debited and Common Stock is credited, reflecting the issuance of new shares. Thus, both parts of the process involve Common Stock and Common Stock Distributable, making both A and B correct in the context of the entire process.

The Entry to Record the Distribution of the Stock Dividend