Question

Splish Corporation has outstanding 400,000 shares of $10 par value common stock. The corporation declares a 10% stock dividend when the fair value of the stock is $63 per share. Prepare the journal entries for Splish Corporation for both the date of declaration and the date of distribution.

Answer 1

• The two journal entries would like this:

Account Titles and Explanation	Debit	Credit	Working
Stock Dividend	$2,520,000		[400000 shares x 10% x $63]
Stock Dividend distributable		$400,000	[400000 shares x 10% x $10 par]
Paid in Capital in excess of par - common stock		$2,120,000	[400000 shares x 10% x $53]
(dividend declared)
Stock Dividend distributable	$400,000
Common Stock		$400,000
(dividend distributed)