The stockholders’ equity accounts of Lawrence Company have the following balance

Question

The stockholders’ equity accounts of Lawrence Company have the following balances on December 31, 2012.

Common stock, $10 par, 200,000 shares issued and outstanding $2,000,000

Paid-in capital in excess of par—common stock 1,200,000

Retained earnings 5,600,000

Shares of Lawrence Company stock are currently selling on the Midwest Stock Exchange at $37. Prepare the appropriate journal entries for each of the following cases. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(a) A stock dividend of 5% is (1) declared and (2) issued.

(b) A stock dividend of 100% is (1) declared and (2) issued.

(c) A 2-for-1 stock split is declared and issued.

Explanation / Answer

Accounts Title & explanation Debit $ Credit $ (a) Retained Earnings 370000 Common Stock distributable 100000 Paid-in capital in excess of par—common stock 270000 Common Stock distributable 100000 Common Stock 100000 (b) No entry (not enough Retained Earnings) 0 0 (c) No entry (being stock split) 0 0

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