Question

Entries for Stock Dividends

Madrid Corporation has 37,000 shares of $30 par common stock outstanding. On June 8, Madrid Corporation declared a 5% stock dividend to be issued August 12 to stockholders of record on July 13. The market price of the stock was $40 per share on June 8.

Journalize the entries required on June 8, July 13, and August 12. For a compound transaction, if an amount box does not require an entry, leave it blank. If no entry is required, select "No Entry Required" and leave the amount boxes blank.

Jun. 8
Jul. 13
Aug. 12

Answer 1

--Journal entries

Date	Accounts title	Debit	Credit
08-Jun	Stock dividend (37000 shares x 5% x $40)	$74,000
	Common Stock distributable (37000 shares x 5% x $ 30 par)		$55,500
	Paid in Capital in excess of Par - Common Stock		$18,500
	(to record declaration)
13-Jun	[No entry required on recor date]
12-Aug	Common Stock distributable (37000 shares x 5% x $ 30 par)	$55,500
	Common Stock		$55,500
	(to record distribution of stock dividend)