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Which of the following is the journal entry to record the declaration of a stock dividend?

A. Debit Common Stock Dividend Distributable (number of shares × par value common stock); credit Common Stock (same)
B. Debit Common Stock Dividend Distributable (number of shares × market value common stock); credit Common Stock (same)
C. Debit Retained Earnings (market value × number of shares); credit Common Stock Dividend Distributable (number of shares × par value); credit Paid-In Capital in Excess of Par Stock Dividend (market value – par value) × number of shares
D. Debit Common Stock (number of shares × par value); credit Cash

Respuesta :

The correct answer is C. Debit retained earnings( market value × number of shares); Common stock credit where the dividends are distributed ( number of shares × par value); Credit paid in capital in excess of par stock dividend ( market value - par value) × number of shares.

In stock dividend there is no cash which is being involved, what is there is distribution of more and more shares of a certain corporation stock.

In this a corporation is not willing to lose anything but to give its stockholders something.

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