On January 1, Sheffield Corporation had 61000 shares of $10 par value common sto
ID: 2530694 • Letter: O
Question
On January 1, Sheffield Corporation had 61000 shares of $10 par value common stock outstanding. On March 17, the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $14 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include which of the following?
a. debit to Common Stock Dividends Distributable for $61000.
b. credit to Paid-in Capital in Excess of Par for $24400.
c. debit to Stock Dividends for $24400.
d. credit to Cash for $61000.
Explanation / Answer
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Correct Answer is :
a. debit to Common Stock Dividends Distributable for $61000.
Entry when declared:
REtained Earning debit (6100*14)
Common Stock Dividends Distributable credit 6100*10
Paid in capital excess at par-common stock 6100*4
Entry when disbrituted (as asked in question on 30th march):
Common Stock Dividends Distributable debit 6100*10
Common Stock Credit 6100*10