CORPORATIONS

5. Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30% stock dividend. The market value was $50 per share, the par value was $10, and the average issue price was $30 per share.

Prepare Journal entry to record the declaration of the stock dividend.

By what amount will Universe decrease shareholders equity for the dividend?

A) $0

B) $1,500,000

C) $4,500,000

D) $7,500,000