Fallingstar, Inc. has 103,000 shares of common stock issued and outstanding, with a par value of per share. It declared a % common stock dividend; market value is per share. Which of the following is the correct journal entry to record the transaction? a. debit Common Stock Dividend Distributable 51,154, debit Paid In Capital in Excess of Par-Common $196,606, and credit Retained Earnings $197.760.
b. debit Stock Dividends $197.760 and credit Cash $197.760.
c. debit Stock Dividends $197.760 and credit Paid - In Capital in Excess of Par-Common $197,760.
d. debit Stock Dividends $197.760, credit Common Stock Dividend Distributable 51.154, and credit Paid - In Capital in Excess of Par-Common $196,606.

debit Stock Dividends $197,760, credit Common Stock Dividend Distributable 1,154, and credit Paid - In Capital in Excess of Par-Common $196,606.

Explanation:

Here is the correct question:

Fallingstar, Inc. has 103,000 shares of common stock issued and outstanding, with a par value of $0.07 per share. It declared a 16% common stock dividend; market value is $12 per share. Which of the following is the correct journal entry to record the transaction?

The correct answer is debit Stock Dividends $197,760, credit Common Stock Dividend Distributable 1,154, and credit Paid - In Capital in Excess of Par-Common $196,606.

Stock dividend is calculated as:

= 103,000 × 16% × $12

= $197,760

Common stock dividend distributable is calculated as:

= 103,000 × 16% × $0.07

= $1153.6

= 1154

the interest will be $59.71

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