Question

on january 1, the board of directors of shante, inc. declared a 10% stock dividend. on this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. the entry to record this transaction would include a debit to in the amount of .

Answer 1

The entry to record the stock dividend would include a debit to Retained Earnings in the amount of $5,000.

Step-by-step explanation:

The entry to record the stock dividend would include a debit to Retained Earnings in the amount of $5,000.

When a stock dividend is declared, the company transfers an amount equal to the market value of the shares being distributed from retained earnings to capital stock or additional paid-in capital. In this case, the company is declaring a 10% stock dividend on 10,000 shares, with a market value of $5 per share. Therefore, the debit to Retained Earnings would be $5,000 (10,000 shares x $5).

Answer 2

When Shante, Inc. declared a 10% stock dividend with 10,000 shares outstanding at a $1 par value and a $5 market value per share, the correct journal entry would include a debit to Stock Dividends for $5,000 and credits to Common Stock Dividend Distributable for $1,000 and Paid-in Capital over Par - Common Stock for $4,000.

Step-by-step explanation:

On January 1, when Shante, Inc. declared a 10% stock dividend, the company had 10,000 shares of $1 par value stock issued and outstanding. With the market value being $5 per share, the entry to record this stock dividend would include a debit to the Stock Dividends account and a credit to Common Stock Dividend Distributable and Paid-in Capital over Par - Common Stock. Specifically, 10% of 10,000 shares equals 1,000 shares for the dividend distribution. Therefore, the journal entry would show a debit to Stock Dividends for $5,000 (1,000 shares x $5 market value per share), a credit to Common Stock Dividend Distributable for $1,000 (1,000 shares x $1 par value per share), and a credit to Paid-in Capital over Par - Common Stock for the remaining $4,000.