Question

Exercise 14-03 a-b (Video)

On January 1, 2020, Blossom Corporation had $1,000,000 of common stock outstanding that was issued at par. It also had retained earnings of $740,000. The company issued 35,000 shares of common stock at par on July 1 and earned net income of $390,000 for the year.

Journalize the declaration of a 14% stock dividend on December 10, 2020, for the following 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 $18.
b.		Par value is $5, and market price is $20.

Answer 1

Answer

--Requirement [a]

Date	Accounts title	Debit	Credit
10-Dec-20	Stock Dividend [(1000000 + 35000) x 14% x $ 18]	$2,608,200
	Common Stock Dividend distributable [(1000000+35000) x 14% x $ 10 par]		$1,449,000
	Paid in Capital in Excess of Par - Common Stock		$1,159,200
	(to record declaration)

--Requirement [b]

Date	Accounts title	Debit	Credit
10-Dec-20	Stock Dividend [(1000000 + 35000) x 14% x $ 20]	$2,898,000
	Common Stock Dividend distributable [(1000000+35000) x 14% x $ 5 par]		$724,500
	Paid in Capital in Excess of Par - Common Stock		$2,173,500
	(to record declaration)