Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Stock Dividends

Financial Accounting

12. Stockholders' Equity

Stock Dividends

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Multiple Choice

A stock dividend is recorded with a transfer from:

Additional Paid-in Capital to Cash

Cash to Retained Earnings

Retained Earnings to Common Stock and Additional Paid-in Capital

Common Stock to Retained Earnings

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Verified step by step guidance

Understand the concept of a stock dividend: A stock dividend is a distribution of additional shares to shareholders instead of cash. It does not affect the total equity but reallocates amounts within equity accounts.

Identify the accounts involved: Stock dividends are recorded by transferring amounts from Retained Earnings to Common Stock and Additional Paid-in Capital. This reflects the issuance of new shares and the reduction in retained earnings.

Determine the journal entry: The journal entry for a stock dividend typically involves debiting Retained Earnings and crediting Common Stock and Additional Paid-in Capital. This ensures the equity section of the balance sheet is updated correctly.

Calculate the amounts: To record the stock dividend, calculate the value of the dividend based on the number of shares issued and the fair market value of the stock. This value will be split between Common Stock (at par value) and Additional Paid-in Capital (the excess over par value).

Prepare the journal entry: Once the amounts are calculated, prepare the journal entry by debiting Retained Earnings for the total value of the dividend and crediting Common Stock and Additional Paid-in Capital for their respective amounts.