Question

Entries for Stock Dividends Senior Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (320,000 shares authorized; 7,000 shares issued), $25 par, $175,000; Paid-In Capital in excess of par-common stock, $35,000; and Retained earnings, $1,925,000. The board of directors declared a 1% stock dividend when the market price of the stock was $31 a share. Senior Life Co. reported no income or loss for the current year. If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" from the dropdown. al. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value. Stock Dividends Stock Dividends Distributable Paid-In Capital in Excess of Par-Common Stock a2. Journalize the entry to record the issuance of the stock certificates. Stock Dividends Distributable Common Stock b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity. Total paid-in capital 210,000 Total retained earnings 1,925,000 Total stockholders' equity 2,135,000 c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity. Total paid-in capital 231,700 Total retained earnings 1,903,300 Total stockholders' equity 2,135,000

Hello, ive tried these problems over and over but I keep getting it wrong. can you please double check my work and correct it? Thank you so much.

Answer 1

Sorry As per Guidline Expert can answer only 1 Question

1)Stock dividend is when the company declare dividend in exchange of share instead of cash to its stockholders

a1) On declaration of Stock dividend  

	Debit	Credit
Dividend (7000×1%) ×31	2170
Stock Dividend Distributable (At par ) $25		$1750
Paid in capital in excess of Par commom stock (31-25)×70		$420
(Being Stock dividend declared)

a.2 On issue of Stock certificate against stock dividend, Distributable account will be close and commom stock will issue .

	Debit	Credit
Stock Dividend Distributable	$1750
To Common Stock		$1750
(Being Share warrante issue against stock dividend declared)

No of Stock dividend = No of Share issue× Percentage of Dividend

=7000×1%

=70

b. Equity before stock dividend

Total Paid in Capital ($175000+$35000)	$210000
Total Retained Earning	$1925000
Total Stockholder's Equity	$2135000

C.Equity after Stock dividend

Total Paid in Capital [ ($175000+1750) +(35000+420)]	$212170
Retained Earnings ($1925000-2170)	$1922830
Total Stockholders Equity	$2135000

As per law , dividend are to be declared out of Income or free reserve .As Dividend are declare and paid out of Profit it will reduces the amount of Retained Earning .

2) Dear Your Answer is all correct , you just have put Beginning balances total incorrect , It is $3186000 and the Endind Stock holder Equity will be $3863000

	Beginning	Ending
Balance of Common Stock	$1100000	$1580000
Balance of Paid in capital in excess of par	$176000	$272000
Balance of Retained Earnings	$1910000	$2085000
Less : balance of Treasory Stock	0	$(74000)
Stockholders Equity	$3186000	$3863000