Question

Bain corp. owned 20,000 common shares of tell corp., purchased in year 1 for $180,000. on december 15, year 5, bain declared a property dividend of all its tell corp. shares on the basis of one share of tell for every 10 shares of bain common stock held by its shareholders. the property dividend was distributed on january 15, year 6. on the declaration date, the aggregate market price of the tell shares held by bain was $300,000. the entry to record the declaration of the dividend should include a debit to retained earnings (or property dividends declared) of

Answer 1

Answer:

$300,000

Explanation:

Although the property dividend was distributed on January 15, year 6. the amount that will be used is the value of the shares as at the declaration date and not the distribution date

Hence, since the aggregate market price of the tell shares held by bain was $300,000. on the declaration date, the entry to record the declaration of the dividend should include a debit to retained earnings (or property dividends declared) of $300,000