Question

On January 1, Ripken Corporation had 40,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include aa. credit to Common Stock for $40,000.b. debit to Common Stock Dividends Distributable for $52,000.c. credit to Paid-in Capital in Excess of Par Value for $12,000.d. debit to Stock Dividends for $12,000.

Answer 1

a. credit to Common Stock for $40,000.

Step-by-step explanation:

The journal entry for March 30 is shown below:

Common Stock Distributable A/c Dr $40,000

To Common Stock $40,000

(Being dividend is distributed to common stock is recorded)

The computation of dividend which is directed to the shareholders is shown below:

= Number of shares × rate of dividend × par value of the share

= 40,000 shares × 10% × $10

= $40,000