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:

Variable

An element, feature, or factor that is likely to vary or change; it could also refer to costs that fluctuate with the level of output.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent or salaries, providing predictability for budgeting.

Responsibility Accounting

A system of accounting that segments financial information by areas of responsibility, allowing managers to be held accountable for their areas' financial performance.

Not-for-Profit Entities

Organizations that operate for purposes other than making a profit, often focusing on social, educational, or charitable endeavors.