Question

uislands E15.14 (LO 3) (Entries for Stock Dividends and Stock Splits) The stockholders' equity accounts of G.K. Chesterton Company have the following balances on December 31, 2020. Common stock, $10 par, 300,000 shares issued and $3,000,000 outstanding Paid-in capital in excess of par-common stock 1,200,000 Retained earnings 5,600,000 Shares of G.K. Chesterton Company stock are currently selling on the Midwest Stock Exchange at $37. Instructions Prepare the appropriate journal entries for each of the following cases. a. A stock dividend of 5% is declared and issued. b. A stock dividend of 100% is declared and issued. c. A 2-for-1 stock split is declared and issued.

Answer 1

Solution:

Transaction	Description	Debit	Credit
a	Retained Earnings [300000*5%*37]	$         555,000
	Common Stock Dividend Distributable [300000*5%*10]		$          150,000
	Paid-in capital in excess of par-common stock [300000*5%*27]		$          405,000
	( To record stock dividend
a	Common Stock Dividend Distributable [300000*5%*10]	$         150,000
	Common Stock		$          150,000
	( To record stock dividend distribution)
b	Retained Earnings [300000*10]	$     3,000,000
	Common Stock Dividend Distributable		$      3,000,000
	( To record stock dividend)
b	Stock Dividend Distributable	$     3,000,000
	Common Stock		$      3,000,000
	( To record stock dividend distribution)
c	No Entry Required	$                    -