Question

On Jan 1, 2020, NatCo had outstanding 10,000 common shares, (originally sold at $15); the quoted market price currently is $20. The company declared and issued a 20% common stock dividend. Give the entry.

Answer 1

Answer -

This entry records the declaration of the stock dividend :-

General Journal	Debit ($)	Credit ($)
Retained earnings [(10000 shares * 20%) * $20] Common stock dividend distributable [(10000 shares * 20%) * $15] Paid-in capital in excess of par [Difference]	40000 - -	- 30000 10000

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This entry records the issuance of the shares :-

General Journal	Debit ($)	Credit ($)
Common stock dividend distributable [(10000 shares * 20%) * $15] Common stock	10000 -	- 10000