Question

Pacifica Papers Inc. needed to conserve cash, so instead of a cash dividend the board of directors declared a 5% common share dividend on June 30, 2020, distributable on July 15, 2020. Because performance during 2020 was better than expected, the company's board of directors declared a $0.95 per share cash dividend on November 15, 2020, payable on December 1, 2020, to shareholders of record on November 30, 2020. The equity section of Pacifica's December 31, 2019, balance sheet showed: Common shares, unlimited shares authorize shares issued and outstanding Retained earnings $7,310,000 2,800,000 Required: 1. Journalize the declaration of the share dividend. The market prices of the shares were $17.90 on June 30, 2020, and $19.90 on July 15, 2020. Assume share dividends account is used when dividends are declared. Answer is complete and correct. No General Journal Debit Credit No | 1 Date June 30, 2020 760,7501 Share dividends Common share dividends distributable 760,750

Please show calculations so I would actually understand it thank you so much.

Answer 1

number of shares issued in share dividend = 850,000 * 5% = share dividends = 42,500 * $17.90 = 42,500 $760,750 date account titles and explanation debit credit $760,750 30-Jun-2020 share dividends common share dividends distributable (to record declaration of share dividends) $760,750 number of share outstanding on November 30, 2020 i.e. shares eligible for cash dividends = 850,000 +42,500 = 892,500 amount of cash dividends = 892,500 * $0.95 = $847,875 2 date account titles and explanation debit credit $847,875 15-Nov-2020 cash dividends common share dividends payable |(to record declaration of cash dividends) $847,875

PACIFICA PAPERS INC. equity section of balance sheet 31-Dec-2020 contributed capital common shares $8,070,750 retained earnings $1,191,375 7310000+760750 2800000-760750-847875 total equity $9,262,125

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