Et1-19 (Supplement 11B) Journalizing Small and Large Stock Dividends LO 11-S2) O

Question

Et1-19 (Supplement 11B) Journalizing Small and Large Stock Dividends LO 11-S2) On December 31, the stockholders' equity section of the balance sheet of R&B; Corporation reflected the following Common stock (par $10; authorized 60,000 shares, outstanding 31,000 shares) $310,000 Additional paid-in capital Retained eamings 12,600 81,000 On February 1 of the following year, a 12 percent stock dividend was issued. The market value of the stock on February 1 was $17 per share. Required Prepare the journal entry to record (a) the small 12 percent stock dividend and, alternatively, (b) the large 100 percent stock dividend. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Record the issue of a 12 percent stock dividend on the 31,000 shares of stock outstanding with a market value of $17 per share. 1 of stock 2 Record the issue of a 100 percent stock dividend on the 31,000 shares of stock outstanding with a par value of $10 per share. FI F3 F5 F7

Explanation / Answer

Journal entry for

(a) a small 12 percent stock dividend

(b) A large 100 percent stock dividend

There is no sufficient retained earning in balance to distribute the 100 percent stock dividend so company have to make provision for the same.

Date Accounting title Debit Credit Feb 1 Retained Earning (3720 * $17) 63240 Common stock (3720 * $10) 37200 Paid in Capital in excess of Par (3720 * $7) 26040

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