Question

A corporation had 50,000 shares of $20 par value common stock outstanding. The board of directors declared and issued a 50% stock dividend. The market value of the stock was $27 per share. What is the journal entry to record this stock dividend?

A) Debit Retained Earnings and credit Common Stock for $675,000

B) Debit Retained Earnings and credit Common Stock for $500,000

C) Debit Retained Earnings and credit Cash for $675,000

D) No entry is made to record the stock dividend.

Answer

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