Question

Entries for Stock Dividends Senior Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (440,000 shares authorized; 8,000 shares issued), $100 par, $800,000; Paid-In Capital in excess of par, common stock, $80,000; and Retained earnings, $9,600,000. The board of directors declared a 2% stock dividend when the market price of the stock was $130 a share. Senior Life Co. reported no income or loss for the current year. If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" from the dropdown. al. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value. a2. Journalize the entry to record the issuance of the stock certificates. b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity. Total paid-in capital Total retained earnings Total stockholders' equity c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity. Total paid-in capital Total retained earnings Total stockholders' equity

Answer 1

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Solution : Requirement @ Journal entries 12 Debit Credit particulars $20800 * Stock Dividends ale or To Stock Dividends Distributable To paid-in capital in excess of par-Common Stock 16000 $ 4800 $16000 * Stock Dividends To Common Distributable al or Stock Alc. $ 16000 - Workings: Stock Dividends : = [8000 Shares x 216] x & 130 per shere = 20800 o Stock Dividends Distributable: = [8000 shares x 210] x & 100 par - $ 16000 ③ paid in capital in excess of par -common Stock: - [8000 Shares & 21.] x [ 4 130 - $100] = $4800

Requirement 6 : Before Stock dividend was declared : 6) Total paid in capital = $ 880000 [ie, $ 800 000 +1 80000) (2) Total Retained earnings = $9600000 (3) Torel Stockholders equity = $10480000 Sie, 8880000 + $ 9600 Requirement @ : After the Stock dividend was declared : 0 Total paid in capital = 900800 lie $ 800.000 + $ 30000 +$ 16000 +4200] (3) Total Retained earnings = 49579200 [ie.49600000 - $ 20800] (3) Total Stock holders equity = $ 10480000 Sie $900800 + $9579200