A Corporation Had 40,000 Shares of $10 Par Value Common

question 32

Multiple Choice

A corporation had 40,000 shares of $10 par value common stock outstanding on August 1.Later that day,the board of directors declared a 9% stock dividend when the market value of each share was $72.The entry to record this dividend is:

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Common Stock Dividend Distributable } & 259,200 & \\
• \hline \text { Retained Earnings } & & 259,200 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Retained Earnings } & 259,200 & \\
• \hline \text { Common Stock Dividend Distributable } & & 259,200 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Retaired Earnings } & 259,200 & \\
• \hline \text { Common Stock Dividend Distributable } & & \mathbf { 3 6 , 0 0 0 } \\
• \hline \text { Paid-In Capital in Excess of Par Value } & & \\
• \text { Common Stock } & & 223,200 \\
• \hline
• \end{array}\]
• D) \(\begin{array}{|l|r|r|}
• \hline \text { Retained Earnings } & 36,000 & \\
• \hline \text { Common Stock Dividend Distributable } & & 36,000 \\
• \hline
• \end{array}\)
• E) No entry is made until the stock is issued