On June 1 . 2014, Revere Corporation declared a stock dividend entitling its stockholders to one additional share for each share held. At the time the dividend was declared, the market value of the stock was $10 per share and the par value was $5 per share. On this date Revere had 1,000,000 shares of common stock authorized of which 500,000 shares were outstanding. Assuming the par value of the

Question

stock was NOT changed, what entry should Revere make to record this transaction?
a. Retained Earnings ............. 5,000,000
Common Stock Dividend Distributable 2,500,000
Capital in Excess of Par..... 2,500,000
b. Stock Dividend Payable ........ 5,000,000
Common Stock Dividend Distributable. 2,500,000
Capital in Excess of Par..... 2,500,000
c. Retained Earnings.............. 2,500,000
Common Stock Dividend Distributable 2,500,000
d. No entry

Answer 1

C