On October 15, 2021, a 6% stock dividend was declared and distributed. The fair value of the common stock on this date was $32.3 per share. Fractional share rights represented 100,000 shares. Cash was paid in lieu of issuing fractional share rights. On the date of declaration and payment, the company had 10.3 million shares of common stock outstanding. The par of the common shares was $5 per share.

Prepare any necessary journal entries to record the above events.

Question

Finn Perkins

Business

7 May, 05:06

On October 15, 2021, a 6% stock dividend was declared and distributed. The fair value of the common stock on this date was $32.3 per share. Fractional share rights represented 100,000 shares. Cash was paid in lieu of issuing fractional share rights. On the date of declaration and payment, the company had 10.3 million shares of common stock outstanding. The par of the common shares was $5 per share.

Prepare any necessary journal entries to record the above events.

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Answers (1)

Know the Answer?

Leyla Holland · Answer 1

The answer is given below;

Explanation:

For Dividend

Dividend Expense (10.3*5*6%) Dr. $3.090 Million

Bank Cr.$3.090 Million

For fractional Shares,

Capital 100,000*32.3 Dr.$ 3,230,000

Cash Cr.$ 3,230,000