On January 1, 2007, Kern Corporation had $1,500,000 of common stock outstanding

Question

On January 1, 2007, Kern Corporation had $1,500,000 of common stock outstanding

that was issued at par and retained earnings of $750,000. The company issued

30,000 shares of common stock at par on July 1 and earned net income of $400,000 for

the year.

Instructions

Journalize the following transactions.

(a) The declaration of a 15% stock dividend on December 10, 2007. On that date the stock had a par value is $10 and market value is $12.

(b) The issuance of the stock dividend on December 25, 2007.

Explanation / Answer

a Final dividend 225000 (1500000*15%) To proposed dividend 225000 b Proposed dividend 225000 To bank 225000 Profit and loss a/c 225000 To proposed dividend 225000

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