Green Day Corporation has outstanding 402,500 shares of $9 par value common stoc
ID: 2422606 • Letter: G
Question
Green Day Corporation has outstanding 402,500 shares of $9 par value common stock. The corporation declares a 100% stock dividend when the fair value of the stock is $68 per share.
Prepare the journal entries for both the date of declaration and the date of distribution. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Declaration Date.
Distribution Date.
Account Titles and Explanation
Debit
Credit
Declaration Date.
Distribution Date.
Explanation / Answer
As soon as the dividend has been declared, the liability needs to be recorded in the books of account as dividends payable.
Entry on Declaration Date:
Account Title Debit Credit
Retained Earnings (402,500* 68) 27,370,000
Common Stock Dividend Distributable (402,500* 9) 3,622,500
Paid in Capital in Excess of Par (402,500* 59) 23,747,500
Entry on Distribution Date:
Account Title Debit Credit
Common Stock Dividend Distributable 3,622,500
Common Stock 3,622,500
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