Beacon Corporation issued a 8 percent stock dividend on 30,000 shares of its $9

Question

Beacon Corporation issued a 8 percent stock dividend on 30,000 shares of its $9 par common stock. At the time of the dividend, the market value of the stock was $26 per share. Required a. Compute the amount of the stock dividend. Stock dividend62,400 b. Show the effects of the stock dividend on the financial statements using a horizontal statements madel In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event. (Amounts to be deducted should be indicated with a minus sign.) Balance Sheet Income Statement AssetsLiabilitics+ Stockholders' Equity RevenueExpense Net Income Cash Flow PIC in+ Excess Common +Retained Cash Stock + Earnin c. Prepare the journal entry to record the stock dividend. (f no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the stock dividend

Explanation / Answer

Req A: Number of shares 30000 Stock dividend 8% Number of shares issued at stock dividend 2400 Market price per share 26 Stock dividend total amount 62400 Credited to Common Stock (2400*9) 21600 Credited to Paid in capital (2400*17) 40800 Req b: Balance Sheet Income Statement Cash flows Assets = Liabilities      + Stockholder's equity Revenue - Expense = Net income Common St PIC RE 0 0 21600 40800 -62400 0 0 0 0 Req c: Journal entry: Accounts title and explanation Debit $ Credit $ Retained earnings Dr. 62400     Common Stock Capital Account 21600     Paid in capital in excess of par value Account 40800

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