On October 15, 2021, a 5% stock dividend was declared and distributed. The fair value of the common stock on this date was $31.4 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 11.6 million shares of common stock outstanding. The par of the common shares was $5 per share.

Question

Rihanna Pace

Business

22 January, 00:54

On October 15, 2021, a 5% stock dividend was declared and distributed. The fair value of the common stock on this date was $31.4 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 11.6 million shares of common stock outstanding. The par of the common shares was $5 per share.

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Jayvon Dudley · Answer 1

Prepare journal entries for each transaction wherever necessary.

Explanation:

October 15,2021

Retained Earnings 11.6*5*5% Dr.$2,900,000

Cash Cr.$2,900,000

Treasury Stock 100,000*31.4 Dr.$3,140,000

Cash Cr.$3,140,000