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9 November, 19:53

On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 24,000, $15 par, common shares. The market price of the common stock is $44 on this date.

Requried:

a. Record the necessary journal entries assuming a small (10%) stock dividend

b. Record the stock dividend assuming a small (10%) stock dividend.

c. Record the stock dividend assuming a large (100%) stock dividend.

d. Record the stock dividend assuming a 2-for-1 stock split.

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  1. 9 November, 20:16
    0
    September 01

    Dr Stock dividends 105,600

    Cr Common stock 36,000

    Cr Additional paidin capital 69,600

    September 01

    Dr Stock dividends 360,000

    Cr Common stock 360,000

    September 01 No journal entry

    Explanation:

    1. 2. & 3. Preparation to Record the journal entries assuming a small (10%) stock dividend

    September 1: Stock dividends (24,000 * 10% * $44) = 105,600

    September 1: Common stock (24,000 * 10% * $15) = $36,000

    1. 2. & 3. Prepartion to Record the journal entries assuming a small (100%) stock dividend,

    September 1: Stock dividends (24,000 shares * $15*100%) = $360,000

    To Record the stock dividend assuming a 2-for-1 stock split.

    No journal entry required

    Hence,

    Colorado Outfitters, Inc. Journal entries

    September 01

    Dr Stock dividends 105,600

    Cr Common stock 36,000

    Cr Additional paidin capital 69,600

    (105,600-36,000)

    September 01

    Dr Stock dividends 360,000

    Cr Common stock 360,000

    September 01 No journal entry
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