Question

Smith has 300,000 shares of common stock outstanding with a par value of $3 per share. Smith authorized a 10% stock dividend when the market value was $8 per share. A journal entry for the stock dividend would require:

5. Gaines originally issued 15,000 shares of $10 par value common stock at $15 per share. During the current year, 1,000 of these shares were reacquired for $20 each. The proper entry to record the reacquisition includes:

Answer 1

Journal entry for stock dividend:

Stock dividend (300,000*10%*$8)	$ 240,000
Commonstock dividends distributable (300,000*10%*$3)		$    90,000
Paid in capital in excess of par		$ 150,000
Retained earnings	$ 240,000
Stock dividend (300,000*10%*$8)		$ 240,000
Commonstock dividends distributable (300,000*10%*$3)	$    90,000
Common stock		$    90,000

5. Journal entry to record repurchase of shares

Treasury stock ($20*1,000)	$ 20,000
Cash		$ 20,000