Question

When a stock dividend of less than 20-25% is declared, and the market value exceeds the par or stated value of the shares, an amount equal to the market value of the shares to be distributed should be charged (debited) to which of the following accounts?

a) Common Stock Dividends Distributable
b) Retained Earnings
c) Cash Dividends
d) Stockholders' Equity

Answer 1

When a stock dividend of less than 20-25% is declared and the market value exceeds the par or stated value of the shares, the amount equal to the market value of the shares to be distributed is charged to the Common Stock Dividends Distributable account.

Step-by-step explanation:

When a stock dividend of less than 20-25% is declared and the market value exceeds the par or stated value of the shares, an amount equal to the market value of the shares to be distributed should be charged (debited) to the Common Stock Dividends Distributable account.