On December 31, the stockholders\' equity section of the balance sheet of R & B

Question

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 22,000 shares) Additional paid-in capital Retained earnings $220,000 11,700 72,000 On February 1 of the following year, a 11 percent stock dividend was issued. The market value of the stock on February 1 was $21 per share. Required Prepare the journal entry to record (a) the small 11 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 Journal entry worksheet 2 Record the issue of a 11 percent stock dividend on the 22,000 shares of stock outstanding with a market value of $21 per share. Note: Enter debits before credits. Transaction General Journal Debit Credit

Explanation / Answer

Answer a Journal entry to record the issue of 11% stock dividend. Date Account Titles and Explanation Debit Credit Feb.1 Retained Earnings [2420 shares * $21] $50,820 Stock Dividend Distributable $50,820 (to record issue of 11% stock dividend at market rate) No.of shares issued as stock dividend = 11% of outstanding shares = 11% * 22000 = 2420 shares Answer b Journal entry to record the issue of 100% stock dividend. Date Account Titles and Explanation Debit Credit Feb.1 Retained Earnings [22000 shares * $10] $220,000 Stock Dividend Distributable $220,000 (to record issue of 100% stock dividend at par value) No.of shares issued as stock dividend = 100% of outstanding shares = 100% * 22000 = 22000 shares

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