Ellis Company has 2,000,000 shares of ordinary stock authorized with a par value of P3 per share of which 600,000 shares are outstanding. Ellis authorized a stock dividend when the market value was P8 per share, entitling its stockholders to one additional share for each share held. The par value of the stock was not changed. Assuming the declaration is not recorded separately, what entry, if any, should Ellis make to record distribution of the stock dividend? a. Retained Earnings............... 4,800,000; Ordinary Stock.................. 1,800,000 Share premium from Stock Dividends 3,000,000 b. Retained Earnings............... 4,800,000; Ordinary Stock.................. 1,800,000 Gain on Stock Dividends....... 3,000,000 c. Memorandum entry noting the number of additional shares issued as a dividend d. Retained Earnings............... 3,000,000; Ordinary Stock.................. 3,000,000
Ellis Company has 2,000,000 shares of ordinary stock authorized with a par value of P3 per share of which 600,000 shares are outstanding. Ellis authorized a stock dividend when the market value was P8 per share, entitling its stockholders to one additional share for each share held. The par value of the stock was not changed. Assuming the declaration is not recorded separately, what entry, if any, should Ellis make to record distribution of the stock dividend? a. Retained Earnings............... 4,800,000; Ordinary Stock.................. 1,800,000 Share premium from Stock Dividends 3,000,000 b. Retained Earnings............... 4,800,000; Ordinary Stock.................. 1,800,000 Gain on Stock Dividends....... 3,000,000 c. Memorandum entry noting the number of additional shares issued as a dividend d. Retained Earnings............... 3,000,000; Ordinary Stock.................. 3,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ellis Company has 2,000,000 shares of ordinary stock authorized with a par value of P3 per share of which 600,000 shares are outstanding. Ellis authorized a stock dividend when the market value was P8 per share, entitling its stockholders to one additional share for each share held. The par value of the stock was not changed. Assuming the declaration is not recorded separately, what entry, if any, should Ellis make to record distribution of the stock dividend?
a. Retained Earnings ............... 4,800,000; Ordinary Stock.................. 1,800,000 Share premium from Stock Dividends 3,000,000
b. Retained Earnings............... 4,800,000; Ordinary Stock.................. 1,800,000 Gain on Stock Dividends....... 3,000,000
c. Memorandum entry noting the number of additional shares issued as a dividend
d. Retained Earnings............... 3,000,000; Ordinary Stock.................. 3,000,000
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