Watson Inc. reported the following excerpts from shareholders' equity on
January 1, 2021:
Preferred shares, 0.90, 300,000 issued and outstanding: $6,000,000
Common shares, 400,000 issued and outstanding: $4,400,000
Answer the five (5) following question Q42-Q46 independently.
For This Question Only, assume that the company declared/distributed a
5% stock dividend on January 2, 2021 when the market price of the
common shares was $10.50 each, prior to this stock dividend. What entry,
if any, should Watson make to record this transaction?
? a. No journal entry required for this transaction. Only a proforma entry
is required.
? b. DR Retained Earnings, $210,000; CR Common Shares, $210,000
? c. DR Retained Earnings, $200,000; CR Common Shares, $200,000
? d. DR Retained Earnings, $220,000; CR Common Shares, $220,000
? e. DR Retained Earnings, $225,000; CR Common Stock Dividend
Distributable, $225,000.