Question

Exercise 11-21 On January 1, 2022, Pronghorn Corp had $1,340,000 of common stock outstanding that was issued at par and retained earnings of $719,000. The company issued 31,000 shares of common stock at par on July 1 and earned net income of $406,000 for the year Journalize the declaration of a 17% stock dividend on December 10, 2022, for the following two independent assumptions. (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) Par value is $10 and market price is $15 (b) Par value is $5 and market price is $8 No. Account Titles and Explanation Debit Credit (a) (b) Open Show Work Click if you would like to Show Work for this question: SHOW LIST OF ACCOUNTS

Answer 1

Prepare the required journal entry as follows: No. Credit Debit $420,750 a Stock Di Account Title & Explanation Stock Dividends (28050 x 15) Common Stock Dividends Distributable (28050 x 10) Paid in capital in excess of par- Common stock (28050 * 5) $280,500 $140.250 Working note: Compute total number of shares outstanding before stock dividends are declared as follows: Total number of shares outstanding = + Shares issued Common stock value U Par value of share ° +31,000 = 299,000 Compute stock dividend as follows: declared Stock dividend = Total number of shares outstanding x = 165,000 x 17% = 28.050 Prepare the required journal entry as follows: No. Credit Debit $406,640 Account Title & Explanation Stock Dividends (50830 X 8) Common Stock Dividends Distributable (50830 x 5) Paid in capital in excess of par- Common stock (50830 x 3) $254,150 $152,490 Working note:

Compute total number of shares outstanding before stock dividends are declared as follows: Common stock value Total number of shares outstanding = - Par value of share + Shares issued 1,340,000 + 31.000 = 299,000 Compute stock dividend as follows: declared Stock dividend = Total number of shares outstanding x = 299,000 x 17% = 50.830