Question 11 On January 1, 2017, Raleish Corporation had $2,000,000 of $10 par va

Question

Question 11

On January 1, 2017, Raleish Corporation had $2,000,000 of $10 par value common stock outstanding that was issued at par and retained earnings of $1,000,000. The company issued 200,000 shares of common stock at $12 per share on July 1. On December 15, the board of directors declared a 15% stock dividend to stockholders of record on December 31, 2017, payable on January 15, 2018. The market value of Raleish Corporation stock was $15 per share on December 15 and $16 per share on December 31. Net income for 2017 was $500,000.

Date

Account Titles and Explanation

Debit

Credit

July 1

Dec. 15

Question 11

On January 1, 2017, Raleish Corporation had $2,000,000 of $10 par value common stock outstanding that was issued at par and retained earnings of $1,000,000. The company issued 200,000 shares of common stock at $12 per share on July 1. On December 15, the board of directors declared a 15% stock dividend to stockholders of record on December 31, 2017, payable on January 15, 2018. The market value of Raleish Corporation stock was $15 per share on December 15 and $16 per share on December 31. Net income for 2017 was $500,000.

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit July 1 Cash (200000*12) 2400000     Common Stock 2000000      paid in capital in excess of par value-Common Stock 400000 (To record issue common stock) Dec 15 Stock dividend (2200000*15%*15) 4950000     Common Stock dividend distributable 3300000     paid in capital in excess of par value-Common Stock 1650000 (To record Stock dividend declared)

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