Question

Entries for Stock Dividends

Answer 1

Answer and Explanation:

a.1 The Journal entry is shown below:-

Stock dividend Dr, $1,980,000 (2,200,000 × $18 × 5%)

        To Stock dividend distributable $1,650,000 (2,200,000 × $15 × 5%)

        To paid in capital in excess of par-common stock

$330,000 (2,200,000 × ($18 - $15) × 5%)

(Being stock dividend is recorded)

2. Stock dividend distributable Dr, $1,650,000

                To common stock $1,650,000

(Being stock dividend is recorded)

b. The computation of amounts before the stock total paid in capital, total retained earnings, and total stockholders' equity is shown below:-

Total paid in capital is

= $33,000,000 + $9,000,000

= $42,000,000

Total retained earning = $89,550,000

Total stockholder equity is

= $42,000,000 + $89,550,000

= $1,31,550,000

c. The computation of amount after the stock dividend total paid-in capital, total retained earnings, and total stockholders' equity is shown below:-

Total paid in capital  is

= $42,000,000 + $1,980,000

= $43,980,000

Total retained earning is

= $89,550,000 - $1,980,000

= $87,570,000

Total stockholder equity is

= $43,980,000 + $87,570,000

= $131,550,000