Eastline Corporation had 12,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 4,080 shares. At the time of the stock dividend, the market value per share was $16. The entry to record this dividend is:

Debit Retained Earnings $40,080; credit Common Stock Dividend Distributable $40,080.

Explanation:

From the question, we have been informed that Eastline Corporation had 12,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 4,080 shares. At the time of the stock dividend, the market value per share was $16.

Based on the information provided, above, the entry to record the dividend will be to debit the retained earnings by $40,080 and then credit the common Stock dividend Distributable by $40,080.