Low Corporation has 50,000 shares of $30 par value common stock outstanding and retained earnings of $1,125,000. The company declares a 100 percent stock dividend. The market price at the declaration date is $30 per share.
a. Prepare the journal entries for (1) the declaration of the dividend and (2) the issuance of the dividend.
General Journal | |||
---|---|---|---|
Ref. | Description | Debit | Credit |
(1) | AnswerCashCash dividendsCommon stockDividends payableStock dividend distributableStock dividends | Answer | Answer |
AnswerCashCash dividendsCommon stockDividends payableStock dividend distributableStock dividends | Answer | Answer | |
Declared 100% stock dividend. | |||
(2) | AnswerCashCash dividendsCommon stockDividends payableStock dividend distributableStock dividends | Answer | Answer |
AnswerCashCash dividendsCommon stockDividends payableStock dividend distributableStock dividends | Answer | Answer | |
Issued stock for 100% stock dividend. |
Solution:
Date | Accounts Title and explanation | Debit | Credit |
1 | Stock Dividend Dr (50,000*100% *$30) | $15,00,000 | |
To Common Stock Dividend Distributable | $15,00,000 | ||
2 | Common Stock Dividend Distributable Dr | $15,00,000 | |
To Common Stock | $15,00,000 |
Low Corporation has 50,000 shares of $30 par value common stock outstanding and retained earnings of...
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