Olde Wine Corporation has 242,000 shares of $30 par common stock outstanding. On

Question

Olde Wine Corporation has 242,000 shares of $30 par common stock outstanding. On February 15, Olde Wine Corporation declared a 2% stock dividend to be issued May 2 to stockholders of record on March 27. The market price of the stock was $55 per share on February 15.

Journalize the entries required on February 15, March 27, and May 2. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Journalize the entries required on February 15, March 27, and May 2. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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CHART OF ACCOUNTS Olde Wine 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 REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense

Explanation / Answer

The following will be the required journal entries:

note : there will be no journal entry required on March 27. Since it is only a record date, on which no financial transaction occurs.

Date General Journal Debit Credit February 15 Stock dividends a/c $266,200 .......To Stock Dividends distributable a/c $145,200 ......To Paid in capital in excess of par Common stock a/c $121,000 (being stock dividends declared, amount being (242,000*2%*$55 =>266,200), stoock dividends distributable is credited wilth par value (242,000*2%*$30=>$145,200), (paid in capital in excess of par is credited with difference between market price and par value (242,000*2% * $25=>121,000) May 2 Stock dividends distributable a/c $145,200 ..........To Common stock a/c $145,200

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