Pro-Builders Corporation has 1,500,000 shares of $5 par common stock outstanding

Question

Pro-Builders Corporation has 1,500,000 shares of $5 par common stock outstanding. On September 2, Pro-Builders Corporation declared a 3% stock dividend to be issued November 30 to stockholders of record on October 3. The market price of the stock was $36 per share on September 2.

Journalize the entries required on September 2, October 3, and November 30. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Income Summary

JOURNAL

ACCOUNTING EQUATION

1

2

3

4

5

CHART OF ACCOUNTS Pro-Builders Corporation General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390

Income Summary

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION    POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

4

5

Explanation / Answer

Date Title Debit Credit Sep-02 Stock dividend distributable (1,500,000*$5*3%) $     225,000 Additional paid in capital (1,500,000*$31*3%) $ 1,395,000 Stock Dividends $ 1,620,000 (To record declaration of stock dividend at 3%) Oct-03 No entry required Nov-30 Common stock $     225,000 Stock dividend distributable (1,500,000*$5*3%) $     225,000 (To record issue of shares against stock dividend)

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