Austin Motor Works Declared a 5% Stock Dividend in 2016

question 115

Multiple Choice

Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share) resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries?

• A)He made no entry because the controller was correct.
• B) APIC-Common Stock 1,700,000
• C) Common Stock 1,700,000
• D) Common Stock 1,700,000