Problem:
A 35% stock dividend was declared on October 2 by the board of directors of a corporation to shareholders of record on October 20 payable on November 10. The closing market price of the stock on October 2 was $18. The corporation currently has the following items on its Stockholder's Equity section (all dollar amounts):
Common Stock ($2 Stated value) - 2,000,000
Paid in Capital in excess of par - 3,000,000
Retained Earnings - 4,000,000
Total Stockholder's Equity - 9,000,000
Which journal entry would be recorded on the declaration date of a stock dividend?
A.
Retained Earnings 700,000
Paid in Captial in excess of stated value 700,000
B.
Retained Earnings - 700,000
Common Stock Dividends Distributable - 700,000
C.
Retained Earnings - 3,600,000
Common Stock - 3,600,000
D.
Common Stock Dividends Distributable - 700,000
Paid in Captial in excess of stated value - 700,000