Question

snihoqsR emoani bnaibo F143 (LO 1) On January 1, 2020, Frontier Corporation had $1,000,000 of common stock outstanding la was issued at par. It also had retained earnings of $750,000. The company issued 40,000 shares of Journ common stock at par on July 1 and earned net income of $400,000 for the vear. 0,001o ouai ni Inosn Instructions Journalize the declaration of a 15% stock dividend on December 10, 2020, for the following independent assumptions. a. Par value is $10, and market price is $18. b. Par value is $5, and market price is $20. A (LO 1) On October 31, the stockholders' equity section of Heins Company consists of common stock $500,000 and retained earnings $900,000. Heins is considering the following two courses of action: (1) declaring a 5% stock dividend on the 50,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. 2010000

Answer 1

E14.3
A
	Common stock outstanding on 01/01/2020 (A)	$10,00,000
	Par value of share (B)	$10
	No of shares outstanding at beginning	1,00,000
	No of shares issued on 1 July	40,000
	Total number of shares outstanding before stock dividends are declared	1,40,000
	Stock dividend	15%
	No of shares issued as dividend(1,40,000*15%)	21,000
	Market value of share	$18
	Total market value of dividends (21,000*18)	$3,78,000
	Par value of 21,000 shares issued as stock dividend (21,000*10)	$2,10,000
	Paid-In Capital in Excess of Par-Common Stock (378,000-210,000)	$1,68,000
	Journal Entry	Dr	Cr
	Retained Earnings	$3,78,000
	Common Stock dividend distributable		$2,10,000
	Paid in Capital in excess of Par Value		$1,68,000
E14.1
Date	Account Head	Dr	Cr
Apr-01	Cash (25,000 shares*17$)	$4,25,000
	Common Stock (25,000 shares*5$)		$1,25,000
	Paid in capital in excess of stated value (25,000 shares*12$)		$3,00,000
Jun-15	Retained Earnings (95,000+25000)shares*1$	$1,20,000
	Dividends Payable		$1,20,000
Jul-10	Dividends payable	$1,20,000
	Cash		$1,20,000
Dec-01	Cash (2000shares * $19)	$38,000
	Common Stock (2000shares * $5)		$10,000
	Paid-in capital in excess of common stock		$28,000
Dec-15	Retained Earnings (95,000+25000+2000)shares*1.2$	$1,46,400
	Dividends Payable		$1,46,400