Question

Eastline Corporation had 13,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 4,995 shares. At the time of the stock dividend, the market value per share was $19. The entry to record this dividend is:

Answer 1

Answer:

1-                   Retained Earnings                                $94905

                                    Common stock                                   $24975

                                   Additional paid in capital                    $69930

Explanation:

Usually stock dividend issued at the market prices. Hence, it will reduce retained earnings by the total amount of dividend. Later the amount of par value of stock recorded in common stock while amount above the par value become the part of Additional paid in capital over the common stock.