Question

Fallingstar, Inc. has 103,000 shares of common stock issued and​ outstanding, with a par value of per share. It declared a ​% common stock​ dividend; market value is per share. Which of the following is the correct journal entry to record the​ transaction?

a. debit Common Stock Dividend Distributable 51,154, debit Paid In Capital in Excess of Par-Common $196,606, and credit Retained Earnings $197.760.
b. debit Stock Dividends $197.760 and credit Cash $197.760.
c. debit Stock Dividends $197.760 and credit Paid - In Capital in Excess of Par-Common $197,760.
d. debit Stock Dividends $197.760, credit Common Stock Dividend Distributable 51.154, and credit Paid - In Capital in Excess of Par-Common $196,606.

Answer 1

Answer: debit Stock Dividends $197,760, credit Common Stock Dividend Distributable 1,154, and credit Paid - In Capital in Excess of Par-Common $196,606.

Step-by-step explanation:

Here is the correct question:

Fallingstar, Inc. has 103,000 shares of common stock issued and​ outstanding, with a par value of $0.07 per share. It declared a ​16% common stock​ dividend; market value is $12 per share. Which of the following is the correct journal entry to record the​ transaction?

The correct answer is debit Stock Dividends $197,760, credit Common Stock Dividend Distributable 1,154, and credit Paid - In Capital in Excess of Par-Common $196,606.

Stock dividend is calculated as:

= 103,000 × 16% × $12

= $197,760

Common stock dividend distributable is calculated as:

= 103,000 × 16% × $0.07

= $1153.6

= 1154