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Entries for Stock Dividends and Stock Splits

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E15-14 (Entries for Stock Dividends and Stock Splits) The stockholders' equity accounts of G.K.
Chesterton Company have the following balances on December 31, 2007.
Common stock, $10 par, 300,000 shares issued and outstanding $3,000,000
Paid-in capital in excess of par 1,200,000
Retained earnings 5,600,000
Shares of G.K. Chesterton Company stock are currently selling on the Midwest Stock Exchange at $37.

Instructions

Prepare the appropriate journal entries for each of the following cases.

(a) A stock dividend of 5% is declared and issued.
(b) A stock dividend of 100% is declared and issued.
(c) A 2-for-1 stock split is declared and issued.

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Solution Summary

The solution computes Entries for Stock Dividends and Stock Splits for Chesterton Company.

Solution Preview

a) 5% Stock Dividend = 300000 * 5% = 1500 shares

Total Share value = 1500*37 = $55,500

Journal Entry

Debit Retained Earnings - $55,500
Credit Common Stock - ...

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