Question

Exercise 11-6 Stock dividends and per share book values LO P2 [The following information applies to...

Exercise 11-6 Stock dividends and per share book values LO P2

[The following information applies to the questions displayed below.]

The stockholders’ equity of TVX Company at the beginning of the day on February 5 follows:

Common stock—$5 par value, 150,000 shares
authorized, 54,000 shares issued and outstanding		 $ 270,000
Paid-in capital in excess of par value, common stock 525,000
Retained earnings 675,000
Total stockholders’ equity $ 1,470,000


On February 5, the directors declare a 16% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $35 per share on February 5 before the stock dividend. The stock’s market value is $30 per share on February 28.

. Prepare entries to record both the dividend declaration and its distribution.

Business   Accounting   
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Answer #1
Date Account title and explanation Debit Credit
Feb. 5 Stock dividend (or) Retained earnings (54,000 x 16% x $35) $ 302,400
        Common stock dividend distributable (54,000 x 16% x $5) $ 43,200
        Paid in capital in excess of par-Common stock $ 259,200
(To recordd the dividend declaration)
Feb. 28 Common stock dividend distributable $ 43,200
        Common stock $ 43,200
(To recordd the dividend distributaion)
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