Question

Sheffield Corporation has outstanding 358,000 shares of $10 par value common stock. The corporation declares a 100% stock dividend when the fair value of the stock is $62 per share. Prepare the journal entries for both the date of declaration and the date of distribution. (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 o for the amounts.) tion. Credits requiredijele secteno Debit Credit Account Titles and Explanation Declaration Date Distribution Date

Answer 1

Journal

Date	Account title	Debit	Credit
	Declaration date
	Retained earnings	$3,580,000
	Common stock dividend distributable		$3,580,000
	Distribution date
	Common stock dividend distributable	$3,580,000
	Common stock		$3,580,000

In case of large stock dividend, par value of common shares is considered for share issue.

Number of shares outstanding = 358,000

Par value of 1 share = $10

Stock dividend declared = 100%

Hence, number of shares to be issued = 358,000 x 100%

= 358,000

Hence, amount to be debited to retained earnings = Number of shares to be issued x Par value of 1 common stock

= 358,000 x 10

= $3,580,000

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