Question

One Foot Above Ground Corporation has 100,000 $1 par value shares outstanding. On July 1, One Foot declared a 30% stock dividend when stocks were selling for $7 per share. The stock will be distributed to stockholders on August 2. Record all the journal entries necessary. (12 points)

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
1-Jul	Stock dividends Dr	$30,000.00
	To Common stock dividend distributable		$30,000.00
	(To record stock dividend declared)
2-Aug	Common stock dividend distributable Dr	$30,000.00
	To Common stock		$30,000.00
	(To record issue of stock dividend)

Note: As 30% stock dividend is considered to be large stock dividend, therefore same will be accounted for at par value.