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12 July, 20:22

To reduce its stock price, Shriver Food Systems, Inc., declared and issued a 75 percent stock dividend. The company has 710,000 shares authorized and 110,000 shares outstanding. The par value of the stock is $1 per share and the market value is $100 per share. Prepare the journal entry to record this large stock dividend. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 12 July, 20:46
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    Dividend $82,500 (debit)

    Cash $82,500 (credit)

    Explanation:

    Dividends are distributed to the shares outstanding at declaration date instead of authorized shares.

    Dividend = 110,000 shares outstanding * $1 * 0.75

    = $82,500

    Note : Value used is based on the par value of shares

    Dividend $82,500 (debit)

    Cash $82,500 (credit)
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