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On January 1, Brunhilde Corporation had 240,000 common shares issued.On March 17, the company declared a 5% stock dividend to be distributed on March 30.The market value of the shares was $9 on March 17 and $12 on March 30.
-The entry to record the transaction of March 17 would include a
A)credit to Retained Earnings for $12,000.
B)credit to Cash for $108,000.
C)credit to Stock Dividends Distributable for $108,000.
D)debit to Stock Dividends Distributable for $144,000.

Question

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On January 1, Brunhilde Corporation had 240,000 common shares issued.On March 17, the company declared a 5% stock dividend to be distributed on March 30.The market value of the shares was $9 on March 17 and $12 on March 30.
-The entry to record the transaction of March 17 would include a
A)credit to Retained Earnings for $12,000.
B)credit to Cash for $108,000.
C)credit to Stock Dividends Distributable for $108,000.
D)debit to Stock Dividends Distributable for $144,000.

Quizplus · Accepted Answer

The entry to record the 5% stock dividend involves crediting the Stock Dividends Distributable account for the market value of the shares to be distributed. In this case, the market value was $9 per share, and there were 240,000 shares outstanding, resulting in a total stock dividend of $108,000 (240,000 x 5% x $9). This is the amount that should be credited to Stock Dividends Distributable.

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