Answer:
A. credit to Paid-in Capital in Excess of Par for $120,000.
E. debit to Stock Dividends for $360,000.
Explanation:
Irrespective of whether the company declared the stock dividend before or after the increase of market value of the stock, the stock dividend will be based on the market value of the common stock. The original journal entry to record the transaction is =
Debit Stock Dividends $360,000
Credit Common Stock Dividends Distributable $240,000
Credit Paid in Capital in Excess of Par $120,000
Calculation = 160,000 shares of $10 par value = $1,600,000 × stock dividend = $1,600,000 × 15% = $240,000
Stock dividend = 160,000 shares of $15 market value = $2,400,000 × stock dividend = $2,400,000 × 15% = $360,000
Additional Paid in capital = $360,000 - 240,000 = $120,000
Therefore, option A and E are the answer.
