Homework Answers
| WORKING NOTES: | ||||
| CALCULATION OF TOTAL VALUE OF DIVIDEND IS PAID | ||||
| Numer of Common Shares outstanding = | 1,00,000 | Shares | ||
| Stock Dividend Declared = 100,000 Shares X 20% | 20,000 | Shares | ||
| Market Value of 1 Shares | $ 10 | Per Shares | ||
| Total value of dividend = 20,000 Shares X $ 10 = | $ 2,00,000 | |||
| Par value of the 20,000 shares = 20,000 Shares X $ 2 = | $ 40,000 | |||
| Addittinal paid in capital in excess of par = $ 200,000 - $ 40,000 = | $ 1,60,000 | |||
| SOLUTION : | ||||
| Journal Entries | ||||
| Sr. No. | Date | Account Title and explanation | Debit | Credit |
| 1 | Dec 31, 2018 | Retained Earnings (20,000 Shares X $ 10) | $2,00,000 | |
| Common Stock dividend distributable | $40,000 | |||
| Paid in Capital in Excess of par | $1,60,000 | |||
| 2 | Jan 15 , 2019 | "No Journal Entry is required for record date" | ||
| 3 | Jan 20 , 2019 | Common Stock dividend distributable | $40,000 | |
| Common Stock | $40,000 | |||
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