[The following information applies to the questions displayed below.] Gilligan Corporation was established on February 15, Year 1. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 31, Year 3, Gilligan's stockholders' equity accounts report the following balances: Common stock, $6 par, 500,000 shares authorized, 55,000 shares issued and outstanding?? $330,000 Paid-in capital in excess of par - Common?? 440,000 $770,000 Retained earnings 1,400,000 Total Stockholders' Equity $2,170,000 At the end of Year 3, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share.Which of the following journal entries will be used to record the
stock dividend?
A.
| Retained earnings | 60,500 | |
| Common stock | 16,500 | |
| Paid-in capital in excess of par value - Common | 44,000 |
B.
| Common stock | 60,500 | |
| Retained earnings | 16,500 | |
| Paid-in capital in excess of par value - Common | 44,000 |
C.
| Dividends | 108,500 | |
| Cash | 108,500 |
D.
| Retained earnings | 16,500 | |
| Common stock | 16,500 |
Answer: A
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