The Journal Entry to Record the Issuance of a Stock

question 62

Multiple Choice

The journal entry to record the issuance of a stock dividend is to:

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

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Definitions:

Financial Position

A snapshot of what a company owns and owes at a specific point in time, encompassing assets, liabilities, and equity.

Promissory Note

A Promissory Note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Simple Interest

Interest calculated only on the principal amount, not on previous interest earned.

Discounted

Refers to the reduction of an item's price or the present value calculations of future cash flows using a discount rate.