Question

On June 13, the board of directors of Siewert Inc. declared a 6% stock dividend on its 50 million, $2 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $33 on June 13 Complete the below table to calculate the stock dividend. Prepare a journal entry that summarizes the declaration and distribution of the stock dividend. Complete this question by entering your answers in the tabs below. Stock Dividend General Journal Complete the below table to calculate the stock dividend. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Stock Dividend Number of outstanding shares Stock dividend percentage (%) Number of shares to be issued Value of stock dividend Stock Dividend General Journal >

Answer 1

Stock Dividend
Number of outstanding shares	50	million
Stock dividend percentage (%)	6	%
Number of shares to be issued	3	million
Market value of 1 share	$33
Value of stock dividend	$99	million

Date	Account title	Debit	Credit
June 13	Retained earnings	99
	Common stock dividend distributable		6
	Paid in capital in excess of par value		93
	(To record declaration of stock dividend
July 1	Common stock dividend distributable	6
	Common stock		6
	(To record issue of dividend shares)

Amount to be debited to retained earnings = Number of shares to be issued x Current market value of 1 common stock

= 3 milion x 33

= $99 million

Amount to be credited to common stock dividend distributable = Number of shares to be issued x Par value per share

= 3 million x 2

= $6 million

Amount to be credited to Paid in capital, in excess of par - common stock = Number of shares to be issued x (market value of 1 common stock - Par value per share)

= 3 million x (33 - 2)

= $93 million

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