On September 15, 2021, the Scottie Company board of directors declared a 10% stock dividend on common shares. The shares are to be distributed on October 10, 2021, to shareholders of record on October 1, 2021. The market price per share on the date of declaration was $24 while the market price on the date of distribution was $26. The common stock has a par of $5 per share and there were 1,000,000 shares outstanding prior to the declaration of the stock dividend. Required: Prepare any necessary journal entries to record the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Chessie

Business

21 August, 03:30

On September 15, 2021, the Scottie Company board of directors declared a 10% stock dividend on common shares. The shares are to be distributed on October 10, 2021, to shareholders of record on October 1, 2021. The market price per share on the date of declaration was $24 while the market price on the date of distribution was $26. The common stock has a par of $5 per share and there were 1,000,000 shares outstanding prior to the declaration of the stock dividend. Required: Prepare any necessary journal entries to record the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Ashlyn Schaefer · Answer 1

Answer and Explanation:

The Journal entry is shown below:-

Sept 15

Retained earning Dr, $2,600,000

(1,000,000 * 10%) * $26

To common stock dividend distributable $500,000

(1,000,000 * 10%) * $5)

To Paid in capital in excess of Par $2,100,000

(1,000,000 * 10%) * ($26 - $5))

(Being deceleration of stock dividend is recorded)

Oct 1

No Journal entry is required

Oct 10

Common stock dividend distributable Dr, $500,000

To Common stock $500,000

(Being distribution of stock dividend is recorded)