Question

Brief Exercise 15-13

Tamarisk Corporation has outstanding 446,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $66 per share.

Prepare the journal entries for Tamarisk Corporation 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 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Declaration Date
Distribution Date

Answer 1

Solution

Account Titles and Explanation	Debit	Credit
Declaration Date
Stock Dividend	$ 1,471,800.00
Paid in capital in excess of Par- Common stock		$ 1,248,800.00
Dividend distributable		$      223,000.00
Distribution Date
Dividend distributable	$      223,000.00
Common stock		$      223,000.00

.Working

Number of shares outstanding before stock dividend	446000
New shares to be issued (446000 x 5%)	22300
Market price per share	$                66.00
Total value of stock dividend (22300*66)	$ 1,471,800.00
Amount to be posted to common stock par value	$     223,000.00
Amount to be posted to additional paid in capital value	$ 1,248,800.00