Question

On January 1, 2020, Blossom Company had $1,335,000 of common stock outstanding that was issued at par. It also had retained earnings of $750,500. The company issued 45,000 shares of common stock at par on July 1 and earned net income of $405,000 for the year. Journalize the declaration of a 16% stock dividend on December 10, 2020, for the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) Par value is $10, and market price is $19. (b) Par value is $5, and market price is $22

Answer 1

Answer:

(A)

Retained Earnings 527,440 debit

       Common Stock    277,600 credit

       Additional Paid-In 249,840 credit

(B)

Retained Earnings 1,080,640 debit

       Common Stock    245,600 credit

       Additional Paid-In 835,040 credit

Explanation:

1,335,000 common stock

RE 750,500

(A)

40,000 at par value = 10 = 400,000 issued stocks July 1st

Stock dividends 16%

1,735,000 x .16 = 277,600 CS

173,500 x .16 x 19 = 527,440 market value of the bond dividends

Retained Earnings 527,440 debit

       Common Stock    277,600 credit

       Additional Paid-In 249,840 credit

(B)

40,000 x 5 = 200,000 issued stocks July 1st

Stock dividends 16&

1,535,000 x .16 = 245,600 CS

307,000 shares x .16 x 22 = 1,080,640 market value of the bonds dividends

Retained Earnings 1,080,640 debit

       Common Stock    245,600 credit

       Additional Paid-In 835,040 credit