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Lisbon Corp. has 1,000,000 no par common shares authorized, of which 800,000 shares are outstanding. The average carrying value of the shares is $5 per

Lisbon Corp. has 1,000,000 no par common shares authorized, of which 800,000 shares are outstanding. The average carrying value of the shares is $5 per share. When the market value was $10 per share, Lisbon declared a 10% stock dividend. What entry, if any, should Lisbon make to record this dividend declaration?

DR Stock Dividends Payable: $800,000

CR Common Stock Dividend Distributable $800,000

No entry is required to be made.

DR Retained Earnings: $800,000

CR Common Stock Dividend Distributable $800,000

DR Retained Earnings: $400,000

CR Common Stock Dividend Distributable $400,000

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