ZIP Company owns 33,000 shares of the common stock of PIK Company. ZIP decided t
ID: 2596394 • Letter: Z
Question
ZIP Company owns 33,000 shares of the common stock of PIK Company. ZIP decided to divest itself of this investment by distributing the PIK shares in the form of a property dividend. The dividend ratio is one share of PIK for every four shares of ZIP common held by shareholders. ZIP has 132,000 common shares outstanding. On April 15, 2016, the date of declaration, PIK stock had a par value of $5 per share, a book value of $11.3 per share, and a market value of $16.3 per share.
Prepare any necessary journal entries. The shares were distributed on May 15, 2016, to stockholders of record on May 1, 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
ZIP Company owns 33,000 shares of the common stock of PIK Company. ZIP decided to divest itself of this investment by distributing the PIK shares in the form of a property dividend. The dividend ratio is one share of PIK for every four shares of ZIP common held by shareholders. ZIP has 132,000 common shares outstanding. On April 15, 2016, the date of declaration, PIK stock had a par value of $5 per share, a book value of $11.3 per share, and a market value of $16.3 per share.
MTEST #3 G Chege Study | Guided Solutio x lason e D ezto.mheducation.com.hm.tpx 4.00 points ZIP Company owns 33,000 shares of the common stock of PIK Company. ZIP declded to dlvest itself of this investment by distributing the PIK shares in the form of a property dividend. The dividend ratio is one sharc of PlK for every four shares of ZIP commen held by shareholders. ZIP has 132,000 common shares outstanding. On April 15, 2016, the date of declaration, PIK stock had a par value of S5 per share, a boolk value of S11.3 per share, and a markel value of $18.3 per share Required: Prepare any necessary journal entries. The shares were distriouted on May 15, 2016, to stockholders cf reca May 1, 2018. (f no entry is required for a transactionlevent, select "No journal entry required" in the first account fleld.) View transaction list 1 Record appreciation of investment 2 Record dedaration of property dividend. 3 Record the entry on date of record 4 Record the payment of the property dividend. Credit Note :·-journal entry has been entered Record entry Clear entry View general journalExplanation / Answer
Date
General Journal
Debit
Credit
April 15,2016
Investment in PIK common stock [(33000 x ($16.3 - $11.3)]
165000
Gain on investment
165000
Retained earnings
(33000 x $16.3)
537900
Property dividends payable
537900
May 1, 2016
No journal entry required
May 15,2016
Property dividends payable
537900
Investment in PIK common stock
537900
Date
General Journal
Debit
Credit
April 15,2016
Investment in PIK common stock [(33000 x ($16.3 - $11.3)]
165000
Gain on investment
165000
Retained earnings
(33000 x $16.3)
537900
Property dividends payable
537900
May 1, 2016
No journal entry required
May 15,2016
Property dividends payable
537900
Investment in PIK common stock
537900
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.