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 (280,000 shares authorized; 8,000 shares issued), $75 par, $600,000; Paid-In Capital in excess of par- common stock, $120,000; and Retained earnings, $6,600,000. The board of directors declared a 2% stock dividend when the market price of the stock was $99 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. a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value. a2. Journalize the entry to record the issuance of the stock certificates. 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 Total retained earnings Total stockholders' equity

Answer 1

Date | Credit Debit 15.840 Account title and explanation Stock dividend (or) retained earnings (8,000x2%x$99) Common stock dividend distributable (8,000x29x$75) Paid in capital in excess of par-common stock 12,000 3.840 a2 Date Credit Account title and explanation Common stock dividend distributable Common stock Debit 12.000 12.000 Total paid in capital =600,000+120,000 = $720,000 Total retained earnings = $6,600,000 Total stockholders' equity = $720,000+$6,600,000 =$7,320,000 Total paid in capital = $720.000+12,000+3,840 = $735,840 Total retained earnings = $6,600,000 - $15.840 = 6,584.160 Total stockholders' equity = $735.840+6,584,160 =$7.320.000