e) After completing the entry for Exercise 6, what is the debit entry recorded to the Retained Earnings account?

Exercise 6: Stock Dividends Rather than paying dividends in cash, a company may elect to issue additional shares to its current shareholders in the form of a stock dividend. Review the following completed example carefully: On June 20". the Board of Directors of Commerce Inc. declares a 4% stock dividend on its 50,000 outstanding common shares. The date of record is June 30 and the dividend will be distributed on July 14h. The par value of the stock is $10 per share and the market value on July 14h is $16 per share To record the entries for a stock dividend, first complete these steps .Calculate the number of shares to be issued 0.04 x 50,000 shares2,000 shares .Next, calculate dollar value of the stock dividend using the market value 2000 shares x $16 $32,000 Paid-in Capital in Excess of Par Commorn Retained Earnings 32,000 Common Stock 12,000 20,000 NOTE: The above entry is made when the shares are distributed on July 14th Unlike cash dividends, there is no entry necessary at the date of declaration as there is no liability incurred on that date. This is because liabilities are a claim on assets and stock dividends are simply a transfer from Retained Earnings to Common Stock. Now, use the previous example as a guide to record the following stock dividend in the t-accts below On May 15th, the Board of Directors of Traymont Inc. declares a 5% stock dividend on its 10,000 outstanding common shares. The date of record is May 31t and the dividend will be distributed on May 15h. The par value of the stock is $2 per share and the market value on May 15h is $7 per share To record the entries for a stock dividend, first complete these steps Calculate the number of shares to be issued. Next, calculate dollar value of the stock dividend using the market value Paid-in Capital in Excess of Par Common Retained Earnings Common Stock