Low Corporation has 50,000 shares of $30 par value common stock outstanding and retained earnings of...
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. | |||
Homework Answers
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 |
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