Question

Spaces provided for calculations. SHOW ALL OF YOUR WORK. 1: We Move Fast Corporation has 100,000 $1 par value shares outstanding. On July 1, We Move Fast 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. If one is not necessary, state “no journal entry required”. (6 points)

Answer 1

Since the declared stock dividend is more than 25%, it is considered as large stock dividend. The Journal entry will be as follows:

On the date of Declaration of Stk Dividend: (July 1st)

Particulars	Debit	Credit
Retained Earnings	$30000
Common stock dividend payable		$30000
(Being 100000*30% = 30000 shares declared as dividend)

On the date of issue of shares (Aug 2nd)

Particulars	Debit	Credit
Common stock dividend payable	$30000
Common Stock		$30000
(Being 100000*30% = 30000 shares issued @$1per share as stock dividend)