Question

Sealand Company has 80,000 common shares outstanding. Because it wants to retain its cash for other purposes, the company decided to issue stock dividends to its shareholders. The market price of each Sealand Company share was $23.

Prepare the journal entries if the company decides to declare and issue a 7% stock dividend. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account and explanation	Debit	Credit
When declared:
Enter an account title.	Enter a debit amount.	Enter a credit amount.
Enter an account title.	Enter a debit amount.	Enter a credit amount.
When issued:
Enter an account title.	Enter a debit amount.	Enter a credit amount.
Enter an account title.	Enter a debit amount.	Enter a credit amount.

Prepare the journal entry if instead of declaring the stock dividend the company decides to split its shares two-for-one. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account and explanation	Debit	Credit
Enter an account title.	Enter a debit amount.	Enter a credit amount.
Enter an account title.	Enter a debit amount.	Enter a credit amount.

Answer 1

When declared

Retained earnings (80,000*7%*23)	128,800
Stock dividends issuable		128,800

When issued

Stock dividends issuable	128,800
Common shares		128,800

When split

NO ENTRY