Question

Stock Dividends Witt Corporation has 80,000 shares of $5 par value common stock outstanding. At year-end, the company declares a five percent stock dividend. The market price of the stock on the declaration date is $20 per share. Four weeks later, the company issues the shares of stock to stockholders. a. Prepare the journal entry for the declaration of the stock dividend. b. Prepare the journal entry for the issuance of the stock dividend. C. Assume that the company declared a 30 percent stock dividend rather than a five percent stock dividend. Prepare the journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend. General Journal Ref. Description Debit Credit $ 0 $ 0 0 0 Paid-in-Capital in Excess of Par Value To record declaration of stock dividend. Issued common stock for stock dividend. C. 1) To record declaration of stock dividend. Please Stock Dividends Stock Dividend Distributable Paid-in-Capital in Excess of Par Value Common Stock

Answer 1

a	At the time of dividend declaration
	Retained Earning	80,000
	Additional paid in capital excess of par common stock		60,000		=4000*(20-5)
	Stock Dividend Distributable		20,000		=4000*5
	No. of stock =3230000*5%	4,000	=80000*5%
	Dividend amount=Number of share *Current Price	80,000	=4000*20
b	At the time of STOCK ISSUED
	Stock Dividend Distributable	20,000
	Common Stock		20,000
c	At the time of dividend declaration
	Retained Earning	480,000
	Additional paid in capital excess of par common stock		360,000		=24000*(20-5)
	Stock Dividend Distributable		120,000		=24000*5
	No. of stock =3230000*100%	24,000	=80000*30%
	Dividend amount=Number of share *Current Price	480,000	=24000*20
c2	At the time of STOCK ISSUED
	Stock Dividend Distributable	120,000
	Common Stock		120,000