Question

Exercise 18-21 Cash In lieu of fractional share rights (LO18-8] Douglas McDonald Company's balance sheet included the following shareholders' equity accounts at December 31, 2017: ($ in millions) Paid-in capital: Common stock, 1,880 million shares at $1 par Paid-in capital-excess of par Retained earnings Total shareholders' equity $ 1,899 17,600 16.238 $35,638 On March 16, 2018. a 4% common stock dividend was declared and distributed. The market value of the common stock was $39 per share. Fractional share rights represented 2 million equivalent whole shares. Cash was paid in lieu of the fractional share rights. Requlred: 1. Complete the below table to calculate the value of shares issued. 2. Prepare the appropriate entries for the declaration and distribution of the stock dividend. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the below table to calculate the value of shares issued. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Stock Dividend Number of outstanding shares Stock dividend percentage (96) Number of shares to be issued Value of stock dividend s Amount paid in cash for fractional shares Value of shares issued < Required 1 Required 2 >

Answer 1

1) Table

Number of outstanding shares	1800
Stock dividend percentage	4%
Stock dividend percentage	72
Market price per share	39
Value of stock dividend	2808
Amount paid in Cash for fraction shares	0
Value of share issued	2808

2) Journal entry

Date	account and explanation	Debit	Credit
	Stock dividend	2808
	Common Stock dividend distributable		72
	Paid in capital in excess of par value-Common Stock		2736
	Common Stock dividend distributable	72
	Common Stock		72