Question

The stockholders’ equity accounts of Bridgeport Company have the following balances on December 31, 2017.

Common stock, $10 par,  295,000 shares issued and outstanding		$ 2,950,000
Paid-in capital in excess of par—common stock		1,280,000
Retained earnings		5,950,000

Shares of Bridgeport Company stock are currently selling on the Midwest Stock Exchange at $ 39.

Prepare the appropriate journal entries for each of the following cases. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)		A stock dividend of  7% is (1) declared and (2) issued.
(b)		A stock dividend of 100% is (1) declared and (2) issued.
(c)		A  2-for-1 stock split is (1) declared and (2) issued.

Answer 1

a)1)

Particulars	Debit	Credit
Retained Earnings (295,000 *5% * 39)	$575,250
Common stock dividend distributable (295000*5%*10		$147,500
Paid in capital in excess of Par		$427,750

A)2)

Particular	Debit	Credit
Common stock dividend distribution	$147,500
Common stock		$147,500

B)1) Common stock distribution = 295,000* 100% = 295000 shares.

Particular	Debit	Credit
Retained Earnings ($295,000 * 10)	$2,950,000
Common stock dividend distribution		$2,950,000

B) 2)

Particular	Debit	Credit
common stock dividend distribution	$2,950,000
Common stock		$2,950,000.

C)1) No entry is required because no Par value of the share decreases

C)2) No entry is required