Question

"Exercise 15-14 The stockholders' equity accounts of Marigold Company have the following balances on December 31, 2017. $3,010,000 Cornmon stock, $10 par, 304,000 shares issued and outstanding Paid-in capital in excess of ar-common 1,290,000 5,340,000 Retained eamings Shares or Marigold Company stock are currently selling on the Midwest Stock Exchange at $40. Prepare the apprapriate joumal entries for each of the following cases. (Credit account titles are automatically anlounts.) Hount is entered. Do not indet manually. If no entry is required, select "No Entry" for the account titles and enter for the (a) Astuck dividend of 7% is (1) declared and (2) issued. (b) A stock dividend of 100% Is (1) declared and (2) scued. (c) A2 for 1 stock split is (1) declared and (2) issued. Debit Credit No. Account Titles and Explanation (a) (1) (-) (2) (5) (1) (=) () (0) (1) (0 (2)

Answer 1

Requirement a:

No.	Account title and Explanation	Debit	Credit
(a) (1)	Retained earnings	$851,200
	Common stock dividend distributable		$212,800
	Paid-in capital in excess of par-common stock		$638,400
	[To record declaration of stock dividend]
(a) (2)	Common stock dividend distributable	$212,800
	Common stock		$212,800
	[To record issuance of common stock]

Calculations:

Stock dividend in shares = Outstanding shares x % of stock dividend

= 304,000 x 7%

= 21,280 shares

Retained earnings = 21,280 shares x $40 market rate = $851,200

Common stock dividend distributable = 21,280 shares x $10 par = $212,800

Paid-in excess of par = $851,200-$212,800 = $638,400

Requirement b:

No.	Account title and Explanation	Debit	Credit
(b) (1)	Retained earnings	$3,040,000
	Common stock dividend distributable		$3,040,000
	[To record declaration of stock dividend]
(b) (2)	Common stock dividend distributable	$3,040,000
	Common stock		$3,040,000
	[To record issuance of common stock]

Calculations:

Stock dividend in shares = 304,000 x 100% = 304,000 shares

Common stock dividend distributable = 304,000 x $10 par = $3,040,000

Retained earnings should be recorded at par value because it's large stock dividend.

Requirement c:

No.	Account title and Explanation	Debit	Credit
(c) (1)	No Entry
(c) (2)	No Entry

*No Entry for stock-split declaration and for issue