Problem 2- Stock Dividends The stockholders\' equity section of Lucas Company\'s

Question

Problem 2- Stock Dividends The stockholders' equity section of Lucas Company's October 31, 2018, year-end balance sheet is presented below: Common stock, $25 par value Preferred stock, $50 par value Paid-in capital in excess of par Retained earnings Less treasury stock, 20,000 shares, at cost (700,000) $4,250,000 500,000 860,000 2,800,000 On November 1, 2018, the board of directors of Lucas Company declared a stock dividend on common stock, to be distributed on December 5, 2018. The market price of Lucas Company's common stock was $35 on November 1, 2018, and $37 on December 5,2018 un Record the journal entry necessary at the date of declaration, assuming that 1) A 10% stock dividend was declared. 2) A 30% stock dividend was declared.

Explanation / Answer

Common stock (4250000/25) 170000 Less Treasury stock 20000 Common stock for stock dividend 150000 a) 10% stock dividend 15000 (150000*10%) Stock Dividend 525000 (15000*35)             Common stock 375000 (15000*25)              Paid in capital in excess of par 150000 (15000*10) b) 30% stock dividend 45000 (150000*30%) Stock Dividend 1575000 (45000*35)             Common stock 1125000 (45000*25)              Paid in capital in excess of par 450000 (45000*10)

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