Question

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

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

Common stock—$25 par value, 150,000 shares
authorized, 59,000 shares issued and outstanding		 $ 1,475,000
Paid-in capital in excess of par value, common stock 426,000
Retained earnings 553,000
Total stockholders’ equity $ 2,454,000

On February 5, the directors declare a 2% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $36 per share on February 5 before the stock dividend.

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

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Answer #1
Answer
Journal entry
No Date Account and explanation Debit credit
1 Feb-05 Retained earnings (59000*2%*36) $     42,480
Common Stock dividend distributable( 59000*2%*25) $     29,500
Paid in capital in excess of par value-Common Stock $     12,980
(To record dividend declared)
2 Feb-28 Common Stock dividend distributable $     29,500
Common Stock $     29,500
(To record stock distributed)
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