Question

49. Marcy Company declared a 100% common stock dividend on January 1, 2005, when the market price of the stock was $7.50. The entry to record this dividend will: A) debit Retained Earnings,$100,000 B) credit Common Stock Dividend Distributable,$50,000 C) credit Contributed Capital in excess of par, Common Stock, $25,000 D) credit Common Stock Dividend Distributable, $100,000 E) Since this is considered a stock split, no journal entry is made

Answer 1

Answer:

C) credit Contributed Capital in excess of par, Common Stock, $25,000

Explanation:

Missing word "Preferred Stock - 6% cumulative, $20 par value, 10,000 shares authorized, 5,000 shares issued and outstanding . .$100,000. Contributed Capital in excess of par value, Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     . . . . . .     250,000. Common Stock, $5 par value, 20,000 shares authorized, 10,000 shares issued and outstanding. . . . . . . . . . . . . . . . .  50,000. Contributed Capital in excess of par value, Common Stock . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . 450,000. Total Contributed Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 850,000. Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150,000. Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000"

The journal entry to record the stock dividend will be:  

Date   Account Titles                                                 Debit     Credit

          Retained earnings                                        $75,000

          (10000*7.50*100%)

                Common stock dividends distributable                $50,000

                (10000*100%*$5)

                Contributed Capital in excess of par value,           $25,000

                Common Stock (10000*100%*(7.5-5))