Question

A corporation had 10,000 shares of $10 par value common stock outstanding. The board of directors declared and issued a 10% stock dividend. The market value of the stock was $20 per share. What is the journal entry to record this stock dividend?

A) Debit Retained Earnings and credit Common Stock for $20,000

B) Debit Retained Earnings and credit Common Stock for $10,000

C) Debit Retained Earnings for $20,000, credit Common Stock for $10,000, and credit Additional Paid-in Capital for $10,000

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

Answer

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