pter 18 Homework Assignment Saved On June 13, the board of directors of Siewert

ID: 2585827 • Letter: P

Question

pter 18 Homework Assignment Saved On June 13, the board of directors of Siewert Inc. declared a 5% stock dividend on its 60 million, $1 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $32 on June 13 Complete the below table to calculate the stock dividend. Prepare the journal entry to record the stock dividend. Complete this question by entering your answers in the tabs below. Stock Dividend General Journal Prepare the journal entry to record the stock dividend. (If no entry is required for a transaction/e entry requiredt in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet Record the stock dividend. Note: Enter debits before credits. Prev 7 of 9 Next

Explanation / Answer

Stock dividends are the distribution of shares to the outstanding common shareholders of the company. It is distributed through the accumulated profit (like retained earnings) of the company; therefore, retained earnings should be debited for a deduction and common stock should be debited for an addition.

Such entry should be recorded on declaration date only.

Amount of stock dividends = Shares × Par value × Dividend rate

= 60 million × $1 × 5%

= $3 million

Journal

Date

Account titles and explanations

P.ref

Debit $ in million

Credit $ in million

June 13

Retained earnings

Common stock

To record declaration of stock dividends at 5% rate