H? Stock is credited dends is debited for $40, for $40,
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A company originally issued 17,000 shares of $7 par value common stock at $13 per share. The board of directors declares a 12% stock
dividend when the market price of the stock is $20 a share. Which of the following is included in the entry to record the declaration of a
stock dividend?
Common Stock is credited for $40,800.
Stock Dividends is debited for $40,800.
Stock Dividends is debited for $20,400.
Common Stock-$7 Par Value is credited for $38,760.
Expert Solution
Step 1
Answer :
Entry to declaration of a stock dividend
| Stock dividend (17000*12%*20) | $40,800 | |
| Common stock (17,000*12%*$7) | $14,280 | |
| Additional paid up capital | $26,520 | |
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