Question

Q6. Journalize the following selected transactions completed during the current fiscal year. Jan. 3 The board of directors declared a stock split that reduced the par of common shares from $100 to $20. This action increased the number of outstanding shares to 400,000. 22 Declared a dividend of $1.75 per share on the outstanding shares of common stock. Feb. 8 Paid the dividend declared on January 22. Sept. 1 Declared a 5% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $30.) Oct. 1 Issued the certificates for the common stock dividend declared on September 1.

Answer 1

Ans: Journal Entry

Date	Account title and explanation($)	Debit($)	Credit($)
Jan 3	No Entry Required
Jan 22	Cash Dividend	700,000
	Dividend Payable{400,000*1.75}		700,000
	{to record dividend declared}
Feb 8	Dividends Payable	700,000
	Cash		700,000
	{to record the payment of dividend}
Sept 1	Stock dividend{400,000*5%*30}	600,000
	Dividend Distributable{400,000*5%*20}		400,000
	Paid in capital In Excess of Par		200,000
	{to Record Declaration of Stock Dividend}
Oct 1	Dividend Distributable	400,000
	Common Stock		400,000
	{to record issue of Dividend Declared}

No entry Required for Stock split that reduced the value from 100 to 20