Question

The stockholders’ equity accounts of Novak Company have the following balances on December 31, 2020.

Common stock, $10 par, 281,000 shares issued and outstanding		$2,810,000
Paid-in capital in excess of par—common stock		1,110,000
Retained earnings		5,710,000

Shares of Novak Company stock are currently selling on the Midwest Stock Exchange at $36.

Prepare the appropriate journal entries for each of the following cases. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)		A stock dividend of 8% is (1) declared and (2) issued.
(b)		A stock dividend of 100% is (1) declared and (2) issued.
(c)		A 2-for-1 stock split is (1) declared and (2) issued.The stockholders’ equity accounts of Novak Company have the following balances on December 31, 2020. Common stock, $10 par, 281,000 shares issued and outstanding $2,810,000 Paid-in capital in excess of par—common stock 1,110,000 Retained earnings 5,710,000 Shares of Novak Company stock are currently selling on the Midwest Stock Exchange at $36. Prepare the appropriate journal entries for each of the following cases. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) A stock dividend of 8% is (1) declared and (2) issued. (b) A stock dividend of 100% is (1) declared and (2) issued. (c) A 2-for-1 stock split is (1) declared and (2) issued.

Answer 1

		Debit	Credit
a1	Retained Earnings	809280		=281000*8%*36
	Common Stock Dividend Distributable		224800	=281000*8%*10
	Paid-in Capital in Excess of Par-common		584480
a2	Common Stock Dividend Distributable	224800
	Common stock		224800
b1	Retained Earnings	2810000
	Common Stock Dividend Distributable		2810000
b2	Common Stock Dividend Distributable	2810000
	Common stock		2810000
c1	No Entry	0
	No Entry		0
c2	No Entry	0
	No Entry		0