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Journal Entry for Stock Dividend

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Issued 410 shares of $80 par value preferred stock at par.
Issued 640 shares of $80 par value preferred stock in exchange for land that had an appraised value of $81,600.
Issued 21,000 shares of $4 par value common stock for $10 per share.
Purchased 5,200 shares of common stock for the treasury at $10 per share.
Sold 2,100 shares of the treasury stock purchased in transaction d for $12 per share.
Declared a cash dividend of $1.6 per share on the preferred stock outstanding, to be paid early next year.
Declared and issued a 4% stock dividend on the common stock when the market price per share of common stock was $14. (Assume state law allows stock dividends and stock splits on treasury stock.)
Debit Credit
Retained earnings = $11,760
Common Stock _________
Additional paid-in capital _________

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The Journal Entry for 4% Stock Dividend will be based 21,000 shares issued

Stock dividend ...

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The solution provides the journal entry for stock dividend.

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Prepare, in proper form, the journal entries required to account for the dividend transactions.

Background (prior problem data):

Sixnut, Incorporated has been authorized to issue 1,000,000 shares of $1 par common stock, and 100,000 shares of 8%, $100 par, cumulative, preferred stock. During the first six months of operation, the following transactions occurred related to the stock.
Jul 1st Sold 200,000 shares of common stock for $15 per share, and 100,000 shares of preferred stock, sold at par.
Jul 1st Issued 100,000 shares of common stock in exchange for the following assets: Land $250,000
Building 750,000
Equipment 300,000
Inventory 200,000

The market value of the stock was $15 per share.

Sep 1st Sold 100,000 shares of common stock for $20 per share.

Oct 31st Repurchased 50,000 shares of common stock for $25 per share.

Sixnut has elected to use the cost method to account for the treasury stock.

Nov 30th Re-sold 20,000 shares of the treasury stock for $35 per share.

Dec 31st Recorded net income for the first six months in the amount of $5,000,000.

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Required: Prepare, in proper form, the journal entries required to account for the
dividend transactions shown below:

Mar 31st Declared a $2 per share dividend to the common stockholders of record at
April 15th, payable on April 30th.
 
Mar 31st Declared ½ of the annual preferred stock dividend to the stockholders of
record at April 15th, payable on April 30th.
 
Jun 30th Declared a 2 for 1 stock split.
 
Jul 31st Declared a 10% stock dividend to the common stockholders of record at
August 15th, to be distributed on August 31st. The market value of the
Stock on July 31st was $20 per share.
 
Sep 30th Declared ½ of the annual preferred stock dividend tot the stockholders of
record Oct 15th, payable on Oct 31st.
 

 

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