Question

Aaron Company plans to issue a large stock dividend. In accounting for this transaction, what effects occur to the contributed capital section of stockholders' equity?
A. Common stock increases by the number of dividend shares x par value per share, and retained earnings decreases for the same amount

B. Retained earnings increases by the number of dividend shares x par value per share, and additional paid-in capital increases for the balance

C. Common stock increases by the number of dividend shares x par value per share, and retained earnings increases for the balance

D. Common stock increases by the total market value of the dividend

Answer 1

Answer:

Answer: A  Common stock increased by: Dividend shares × Par value per share. Retained earnings is decreased by the same amount.

Explanation