Question

On January 1, BearBack Corporation had 300,000 common shares issued. On April 10, the company declared...

On January 1, BearBack Corporation had 300,000 common shares issued. On April 10, the company declared a 10% stock dividend to be distributed on April 30. The market value of the shares was $7 on April 10 and $10 on April 30. The entry to record the transaction of April 10 would include a

a) credit to Stock Dividends Distributable for $210,000.

b) debit to Stock Dividends Distributable for $300,000.

c) credit to Cash for $210,000.

d) credit to Retained Earnings for $30,000.

Homework Answers

Answer #1

Correct answer-------------a) credit to Stock Dividends Distributable for $210,000.

.

Working

Shares Outstanding 300000
Stock Dividend % 10%
New shares to be issued (300000 x 10%) 30000
Market value per share $               7.00
Value of Stock Dividend (30000 x $7) $ 210,000

Stock dividend will be debited by $210,000 and Stock dividend distributable will be credited by $210,000

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