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Austin Motor Works Declared a 5% Stock Dividend in 2016

Question 115

Multiple Choice

Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share) resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries?


A) He made no entry because the controller was correct.
B) Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share) resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries? A) He made no entry because the controller was correct. B) APIC-Common Stock 1,700,000 C) Common Stock 1,700,000 D) Common Stock 1,700,000 APIC-Common Stock 1,700,000
C) Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share) resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries? A) He made no entry because the controller was correct. B) APIC-Common Stock 1,700,000 C) Common Stock 1,700,000 D) Common Stock 1,700,000 Common Stock 1,700,000
D) Austin Motor Works declared a 5% stock dividend in 2016 when the stock was selling for $18 per share.There were 2,000,000 shares outstanding at the time of the dividend declaration.The controller recorded the distribution at par value ($1 per share) resulting in a debit to retained earnings and a credit to common stock for $100,000.Upon review in early 2017 when the 2016 books were still open,the CFO made which of the following correcting entries? A) He made no entry because the controller was correct. B) APIC-Common Stock 1,700,000 C) Common Stock 1,700,000 D) Common Stock 1,700,000 Common Stock 1,700,000

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