Question

Prepare General Journal and Balance sheets

The shareholders' equity of Raven Company is as shown: Raven Company Partial Balance Sheet Common stock, $10 par Additional Paid-in Capital on Common Stock $200,000.00 2 100,000.00 3 Retained Eamings 200,000.00 $500,000.00 Raven is considering the declaration and issuance of a stock dividend at a time when the market price is $30 per share. Required: 1. Assuming the board of directors recommends a 6% stock dividend, prepare a. the journal entry at the date of declaration b. the journal entry at the date of issuance c. shareholders' equity after the issuance 2. Assuming, instead, that a 40% stock dividend is recommended, answer a, b, and cof Requirement 1.

Answer 1

1	Assume board director consider 6% Stock dividend
	On declaration Date (6%)	Debit	Credit
	Retained Earnings(1200*30)	36000
	Common Stock Dividend Payable(1200*10)		12000
	Additional Paid-in Capital-Common Stock		24000
	On Distribution os stock dividend
	Common Stock Dividend Payable(1200*10)	12000
	Common Stock		12000
2	Assume board director consider 40% Stock dividend
	On declaration Date (6%)	Debit	Credit
	Retained Earnings(8000*30)	240000
	Common Stock Dividend Payable(8000*10)		80000
	Additional Paid-in Capital-Common Stock		160000
	On Distribution os stock dividend
	Common Stock Dividend Payable(8000*10)	80000
	Common Stock		80000

Assume board director consider 6% Stock dividend			Assume board director consider 40% Stock dividend
Partial Balanse sheet Dec 31 2016			Partial Balanse sheet Dec 31 2016
Common Stock,$10 Par	212000		Common Stock,$10 Par	280000
Additional Paid- In capital on common stock	100000		Additional Paid- In capital on common stock	100000
Additional Paid- In capital from stock dividend	24000		Additional Paid- In capital from stock dividend	160000
Retained Earnings	164000		Retained Earnings	-40000