1. Stonehenge Corporation has300,000 shares of $40 par common stock outstanding.
ID: 2458281 • Letter: 1
Question
1. Stonehenge Corporation has300,000 shares of $40 par common stock outstanding. OnFebruary 13, Stonehenge Corporation declared a 3% stock dividend tobe issued April 30 to stockholders of record on March 14. Themarket price of the stocks was $63 per share on February13.
Journalize the entries required on February 13, March 14, andApril 30.
Date
Account Name
Debit
Credit
2/13
3/14
4/30
Journalize the transactions of January 24, March 15, and June2.
Date
Account Name
Debit
Credit
1/24
3/15
6/2
Date
Account Name
Debit
Credit
2/13
3/14
4/30
Explanation / Answer
Journalize the entries required on February 13, March 14, andApril 30. : A stock dividend occurs when a corporation gives stockholdersadditional shares of stock as a dividend instead of cash. Theimpact of a stock dividend is that the corporation transfersretained earnings to contributed capital. The amount transferred isequal to the market value of the shares issued. There is no impacton total assets, total liabilities, or total stockholders'equity.:
The dividend distributed to the stockholders will be 9000 sharesof
stock (300000shares x 3%), so the recordedvalue of the dividend is
$567000(9000shares x $63 market price pershare). The entries to
record the dividend would be asfollows:
Date Account Name Debit Credit 2/13 Retained earnings 567000 stock dividend distributable 360000 paid in excess of par 207000 3/14 no entry 4/30 there would be no entry for 3/14 : 4/30 entry :
stock dividend distributable 360000 commonstock 360000 "Stock Dividends Distributable" is not a liability. It
is actually a component ofstockholders equity. This is
in contrast to dividends payable forcash and property dividends.
Dividends payable is aliability. Date Account Name Debit Credit 2/13 Retained earnings 567000 stock dividend distributable 360000 paid in excess of par 207000 3/14 no entry 4/30
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