Sunrise Corp. has 200,000 shares of $10 par common stock outstanding. The company declares a 10% stock dividend when the market price is $25 per share. <br/><br/>What journal entry should Sunrise record for the stock dividend?

Debit Retained Earnings $200,000; Credit Common Stock $200,000

Debit Retained Earnings $500,000; Credit Common Stock $200,000; Credit Additional Paid-in Capital $300,000

Debit Stock Dividends $500,000; Credit Stock Dividends Distributable $500,000

No entry required until shares are distributed