Question

PB6.

LO 14.3Tent & Tarp Corporation is a manufacturer of outdoor camping equipment. The company was incorporated ten years ago. It is authorized to issue 50,000 shares of $10 par value 5% preferred stock. It is also authorized to issue 500,000 shares of $1 par value common stock. It has issued 5,000 common shares and none of the preferred shares. Tent & Tarp has the following transactions:

Mar. 1	Declares a cash dividend of $3 per share
Mar. 30	Pays the cash dividend
Jul. 10	Declares a 35% stock dividend when the stock is trading at $15 per share
Aug. 5	Issues the stock dividend

Journalize these transactions.

Answer 1

Tent & Trap Corporation

Journal
Date	Particulars	LF	Debit    $	Credit    $
1-Mar	Retained Earnings or Cash Dividend A/c     Dr		15,000.00
	To Dividend Payable			15,000.00
	(Declare Cash Dividend of $3 per Share)
30-Mar	Dividend Payable A/c                                         Dr		15,000.00
	To Cash			15,000.00
	( Pays Cash Dividend)
10-Jul	Retained Earnings                                               Dr		26,250.00
	To Common Stock Dividend Distrebutable			1,750.00
	To Paid in Capital In Excess of Par			24,500.00
	( Declares a 35% stock dividend when the stock is trading at $15 per share)
5-Aug	Common Stock Dividend Distrebutable A/c Dr		1,750.00
	To Common Stock A/c			1,750.00
	( Issues the stock dividend)

Calculation of Number of Common Stock Shares Issued

Company Declare 35% of Stock Divident

Number of Share = 5000x35/100 = 1750 Share