Question

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

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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.

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)