Question

The declaration, record, and payment dates in connection with a cash dividend of $101,600 on a corporation’s common stock are January 12, March 13, and April 12.

Journalize the entries required on each date. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Journalize the entries required on each date. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

Effect of Stock Split

Copper Grill Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Copper Grill Restaurant Corporation, which had 21,000 shares of common stock outstanding, declared a 3-for-1 stock split.

a. What will be the number of shares outstanding after the split?
shares

b. If the common stock had a market price of $228 per share before the stock split, what would be an approximate market price per share after the split?
$ per share

Answer 1

	Date	Description	Debit	Credit	Assets	Liabilities	Equity
1	January 12	Cash dividends	$101,600				↓
2		Cash dividends payable		$101,600		↑
3	April 12	Cash dividends payable	$101,600			↓
4		Cash		$101,600	↓

Note: There would be no journal entry on the date of record.

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Question 2

a. What will be the number of shares outstanding after the split?

Answer: 63,000

.

Working:

Shares outstanding before the stock split = 21,000

Shares outstanding after the stock split = 21,000 x 3 = 63,000

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.

b. If the common stock had a market price of $228 per share before the stock split, what would be an approximate market price per share after the split?

Answer: $76 per share

.

Working:

Market price per share before the stock split = $228

Market price per share after the stock split = $228 / 3 = $76