Ask Question
15 April, 14:05

On January 1, Ripken Corporation had 40,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include aa. debit to Stock Dividends for $52,000. b. credit to Cash for $52,000. c. credit to Common Stock Dividends Distributable for $52,000. d. credit to Common Stock Dividends Distributable for $12,000.

+2
Answers (1)
  1. 15 April, 14:07
    0
    a. debit to Stock Dividends for $52,000

    Explanation:

    The journal entry for March 17 is shown below:

    Stock Dividends Dr $52,000

    To Common Stock Distributable $40,000

    To Paid-in Capital in Excess of Par Value, Common $12,000

    (Being excess amount is transferred to the paid in capital)

    The computation of dividend which is directed to the shareholders is shown below:

    = Number of shares * rate of dividend * par value of a share

    = 40,000 shares * 10% * $10

    = $40,000

    The excess amount

    = Number of shares * rate of dividend * (Market value of a share - par value of the share)

    = 40,000 shares * 10% * ($13 - $10)

    = $12,000

    And, the total amount transferred to the Stock Dividends account which equals to

    = $40,000 + $12,000

    = $52,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “On January 1, Ripken Corporation had 40,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers