Question

Green Day Corporation has outstanding 400,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $65 per share. Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.

Answer 1

General Journal	Debit	Credit
Declaration Date
Retained Earnings(400,000 * $65 * 0.05)	$1,300,000
Paid-in Capital in Excess of Par		$1,100,000
Common Stock Dividend Distributable(400,000 * $10 * 0.05)		$200,000
Distribution Date
Common Stock Dividend Distributable	$200,000
Common Stock		$200,000