Reference no: EM132973245
Athleetz, Inc., [AI] reported 2,000,000 no par common shares and 1,000,000 no par, $0.90 preferred shares authorized, on January 1, 2018. On the same date, 300,000 common shares [contributed capital $3,600,000] and 175,000 preferred shares [contributed capital $3,500,000] were outstanding.
Problem 1: Assume that the company declared a 8% stock dividend on February 1, 2018, when the unadjusted market price of the common shares was $12.15 each, prior to this dividend declaration. What entry, if any, should AI make to record this transaction on that date?
a. No Journal Entry required for this transaction. Only a Proforma Entry should be made.
b. DEBIT-Common Stock Dividends [$270,000]; CREDIT-Common Stock Dividend Distributable [$270,000].
c. DEBIT-Retained Earnings [$337,500]; CREDIT-Common Stock Dividend Distributable [$337,500].
d. DEBIT-Common Stock Dividend [$364,500]; CREDIT-Common Stock Capital [$270,000]; CREDIT-Contributed Surplus - Stock Dividends [$94,500].
e. DEBIT-Common Stock Dividend [$270,000]; CREDIT-Common Stock Capital [$270,000].
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