Problem - On June 1, 2011, Patriot Corporation declared a stock dividend entitling its stockholders to one additional share for each share held. At the time the dividend was declared, the market value of the stock was $10 per share and the par value was $5 per share. On this date Patriot had 1,000,000 shares of common stock authorized of which 600,000 shares were outstanding. Assuming the par value of the stock was not changed, what entry should Patriot make to record this transaction?
A) Retained Earnings ............. 6,000,000
Common Stock Dividend Distributable 3,000,000
Capital in Excess of Par..... 3,000,000
B) Stock Dividend Payable ........ 6,000,000
Common Stock Dividend Distributable. 3,000,000
Capital in Excess of Par..... 3,000,000
C) Retained Earnings.............. 3,000,000
Common Stock Dividend Distributable 3,000,000
D) No entry