Question

Rick Co. had 35 million shares of $1 par common stock outstanding at January 1, 2021. In October 2021, Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $69 per share. In recording this transaction, Rick would:

Answer 1

None of the choices are correct

Step-by-step explanation:

We use the par value of stock to determine the dividend instead of the market value of stock.

Dividend Calculation :

Dividend = 35,000,000 shares x $1 x 1%

= $350,000

Journal :

Debit : Dividend $350,000

Credit : Cash $350,000