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.

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