Question

Exercise 15-14 The stockholders’ equity accounts of Bonita Company have the following balances on December 31, 2020. Common stock, $10 par, 323,000 shares issued and outstanding $3,230,000 Paid-in capital in excess of par—common stock 1,230,000 Retained earnings 5,610,000 Shares of Bonita Company stock are currently selling on the Midwest Stock Exchange at $37. 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. No. Account Titles and Explanation Debit Credit (a) (1) enter an account title for case A to record the declaration of stock dividends enter a debit amount enter a credit amount enter an account title for case A to record the declaration of stock dividends enter a debit amount enter a credit amount enter an account title for case A to record the declaration of stock dividends enter a debit amount enter a credit amount (a) (2) enter an account title for case A to record the issuance of stock dividends enter a debit amount enter a credit amount enter an account title for case A to record the issuance of stock dividends enter a debit amount enter a credit amount (b) (1) enter an account title for case B to record the declaration of stock dividends enter a debit amount enter a credit amount enter an account title for case B to record the declaration of stock dividends enter a debit amount enter a credit amount (b) (2) enter an account title for case B to record the issuance of stock dividends enter a debit amount enter a credit amount enter an account title for case B to record the issuance of stock dividends enter a debit amount enter a credit amount (c) (1) enter an account title for case C to record the declaration of the stock split enter a debit amount enter a credit amount enter an account title for case C to record the declaration of the stock split enter a debit amount enter a credit amount (c) (2) enter an account title for case C to record the issuance of the stock split enter a debit amount enter a credit amount enter an account title for case C to record the issuance of the stock split enter a debit amount enter a credit amount SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Journal entry	Dr.($)	Cr.($)
Retained earnings (25840*$37)	956080
To Common stock dividend distributable (25840*$10)		258400
To Paid-in capital in excess of par		697680
(being declaration recorded)
Common stock dividend distriutable	258400
To Common stock		258400
(being distribution recorded)
stock dividend declared = 323000*8% = 25840
part b
Retained earnings (323000*$10)	3230000
To Common stock dividend distributable		3230000
(being declaration recorded)
Common stock dividend distriutable	3230000
To Common stock		3230000
(being distribution recorded)
stock dividend 323000*100%

No journal entry will be passed for stock split but the below memo will be passed.

part c

Dec 31, 2020. Memorandum: A 2-for-1 stock split increased the

number of shares of common stock outstanding from 323,000

to 646,000 and reduced the par value from $10 to $5. The 323,000

new shares were distributed.

calculation for part c stock split 2-for-1

no.of shares before stock split	323000
no.of shares after stock split (323000*2)	646000
additional distribution	323000

par value of per share after stock split

= $3,230,000 / 646,000 shares  = $5 per share