Question

Paris Corporation has 19,000 shares of $20 par common stock outstanding.

On June 8, Paris Corporation declared a 2% stock dividend to be issued August 12 to stockholders of record on July 13.

The market price of the stock was $29 per share on June 8.

Journalize the entries required on June 8, July 13, and August 12

Answer 1

Journal entries:

Date	Account title and explanation	Debit	Credit
June 8	Retained Earnings	$11,020
	Common Stock dividend distributable		$7,600
	Paid-in Capital in Excess of Par-Common		$3,420
	[To record declaration of stock dividends]
July 13	No Entry
August 12	Common stock dividend distributable	$7,600
	Common stock		$7,600
	[To record issuance of stock dividend]

Explanations:

i.Stock dividend (in shares) = Outstanding common shares x % of stock dividend

= 19,000 shares x 2%

= 380 shares

ii.Retained earnings = Stock dividend in shares x Market price of the stock

= 380 x $29

= $11,020

iii.Common stock dividend distributable = Stock dividend in shares x Par value per share

= 380 x $20

= $7,600

iv.Paid in capital in excess of par-common = Stock dividend in shares x (Market price - par value)

= 380 x ($29-$20)

= 380 x $9

= $3,420

v.No entry on dividend record date.