The Mercury Company has 100,000 shares of $10 par common stock outstanding. Management declares (not pays) a 10% stock dividend. The market value of a share of common stock was $15 immediately prior to the stock dividend declaration. The journal entry is:

Question 1 options:

debit stock dividends distributable, $100,000; credit common stock, $100,000.

debit retained earnings, $100,000; credit stock dividend distributable, $50,000; credit paid in capital in excess of par, $50,000.

debit stock dividends distributable, $150,000; credit common stock, $150,000.

debit retained earnings, $150,000; credit stock dividend distributable, $100,000; credit paid in capital in excess of par, $50,000