White Corp. has outstanding 40,000 shares of $5 par value common stock. At year-end, the company...
White Corp. has outstanding 40,000 shares of $5 par value common stock. At year-end, the company declares and issues a 6% common stock dividend when the market price of the stock is $22 per share. What will be the entry to retained earnings as a result of this stock dividend?
a. 40,800 credit
b. 12,000 debt
c. 40,800 debit
d. 52,800 debit
Homework Answers
| Shares to be issued in stock dividend = Shares outstanding * Stock dividend % = 40000 * 6% | 2400 |
| Journal entry for the given transaction is : | ||
| Dr. | Cr. | |
| Retained earnings ( 2400 * 22 ) | 52800 | |
| Common stock ( 2400 * 5 ) | 12000 | |
| Paid in capital in excess of par | 40800 | |
| So, the answer is Option d [ 52,800 debit ] |
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