Question
Odessa Corporation had 20,000 shares of $2 par value commonstock outstanding on July 1. On that day, the board of directorsdeclared a 10% stock dividend
Odessa Corporation had 20,000 shares of $2 par value commonstock outstanding on July 1. On that day, the board of directorsdeclared a 10% stock dividend when the market value of each sharewas $9. The stock dividend is to be distributed on July 20 tostockholders of record on July 10. The entry to record the dividenddeclaration is:
a) Debit Retained Earnings $18,000; credit Common StockDividends Distributable $4,000; credit Paid-In Capital in Excess ofPar Value, Common Stock $14,000.
b) Debit Retained Earnings $18,000; credit Common Stock $4,000;credit Paid-In Capital in Excess of Par Value, Common Stock$14,000.
c) Debit Retained Earnings $18,000; credit Common Stock DividendDistributable $18,000.
d) Debit Retained Earnings $18,000; credit Common Stock$18,000.
e) No entry is made until the stock is issued.
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