The Entry to Record the Distribution of a Stock Dividend

question 93

Multiple Choice

The entry to record the distribution of a stock dividend includes a:

• A)credit to Common Stock and a debit to Retained Earnings.
• B)debit to Retained Earnings and a credit to Stock Dividends Payable.
• C)debit to Stock Dividends Payable and a credit to Stock Dividends.
• D)debit to Stock Dividends Payable and a credit to Retained Earnings.

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Definitions:

Conversion Costs

Refers to expenditures (labor costs and overhead) related to the transformation of materials into finished products.

First-in, First-out Method

An inventory valuation method assuming that the first goods purchased are the first goods sold, usually used to calculate cost of goods sold.

Conversion Costs

The total cost of converting raw materials into finished goods, including both direct labor and manufacturing overhead.

Work in Process

Inventory that is in the production process and is not yet completed.