Answer:
retained earnings 577,200 debit
stock dividends payable 577,200 credit
--to record declared stock dividends--
stock dividends payable 577,200 debit
common stock 156,000 credit
additional paid-in 421,600 credit
--issued stock dividends--
retained earnings 11,544,000 debit
stock dividends payable 11,544,000 credit
--to record declared stock dividends--
stock dividends payable 11,544,000 debit
common stock 3,120,000 credit
additional paid-in 8,424,000 credit
--issued stock dividends--
A 2-for-1 stock split NO ENTRY
Explanation:
<u>Stock dividends of 5%</u>
Shares outstanding 312,000 x 5% x $37 market price
15,600 new shares x $ 37 per share = $ 577,200
First we declare the dividend payable, then we write-off the payable and increase equity.
Common stock for the face value and additional paid-in for the difference:
15,600 x 10 = 156,000
577,200 - 156,000 = 421,600
<u>Stock Dividends of 100%</u>
312,000 x 100% x 37 = 11,544,000
same entries as before but, with difference number
face value 312,000 x 10 = 3,120,000
additional paid-in 8,424,000
<u>A 2-for-1 stock split</u>
No entry is required as the company will have double shares but with halft the value each. It will not effect the total market capitalization.
