C is corrent. The stock dividend is a 15% dividend (3,000/20,000). A stock dividend of less than 20-25% is recorded (on the date of declaration) at the FV of the shares to be issued. This amount is charged to Retained earnings and credited to the Stock dividend distributable and Paid-in capital accounts. The FV of the stock on the date of declaration is not indicated in the problem; however, the FV immediately after issuance of the stock dividend is $15. This is the best choice based on the information available. Therefore, Retained earnings would be charged for $45,000 (3,000 × $15). The retained earnings balance would then be $305,000 ($350,000 – $45,000).
A is incorrect. The stock dividend is a 15% dividend (3,000/20,000). A stock dividend of less than 20-25% is recorded (on the date of declaration) at the FV of the shares to be issued. This amount is charged to Retained earnings and credited to the Stock dividend distributable and Paid-in capital accounts. The FV of the stock on the date of declaration is not indicated in the problem; however, the FV immediately after issuance of the stock dividend is $15. This is the best choice based on the information available. Therefore, Retained earnings would be charged for $45,000 (3,000 × $15). The retained earnings balance would then be $305,000 ($350,000 – $45,000).
B is incorrect. The stock dividend is a 15% dividend (3,000/20,000). A stock dividend of less than 20-25% is recorded (on the date of declaration) at the FV of the shares to be issued. This amount is charged to Retained earnings and credited to the Stock dividend distributable and Paid-in capital accounts. The FV of the stock on the date of declaration is not indicated in the problem; however, the FV immediately after issuance of the stock dividend is $15. This is the best choice based on the information available. Therefore, Retained earnings would be charged for $45,000 (3,000 × $15). The retained earnings balance would then be $305,000 ($350,000 – $45,000).
D is incorrect. The stock dividend is a 15% dividend (3,000/20,000). A stock dividend of less than 20-25% is recorded (on the date of declaration) at the FV of the shares to be issued. This amount is charged to Retained earnings and credited to the Stock dividend distributable and Paid-in capital accounts. The FV of the stock on the date of declaration is not indicated in the problem; however, the FV immediately after issuance of the stock dividend is $15. This is the best choice based on the information available. Therefore, Retained earnings would be charged for $45,000 (3,000 × $15). The retained earnings balance would then be $305,000 ($350,000 – $45,000).
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