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What is recorded on the distribution date of a previously declared stock dividend?
ADebit ordinary share capital; credit Stock Dividends Distributable
BDebit stock dividends; credit cash
CDebit retained earnings; credit Stock Dividends Distributable
DDebit Stock Dividends Distributable; credit ordinary share capital
Answer & Solution
Correct answer: D. Debit Stock Dividends Distributable; credit ordinary share capital
1. On declaration, Stock Dividends Distributable was credited at par.
2. On distribution, the shares are actually issued, so that account is zeroed out.
3. Stock Dividends Distributable is debited and ordinary share capital is credited at par.
4. No cash is involved in a stock dividend, ruling out the cash entries.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §6.6 "Stock Dividends", p.255_
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