Question

The stockholders’ equity accounts of Buffalo Company have the following balances on December 31, 2017.

Common stock, $10 par, 288,000 shares issued and outstanding		$2,880,000
Paid-in capital in excess of par—common stock		1,180,000
Retained earnings		5,750,000

Shares of Buffalo Company stock are currently selling on the Midwest Stock Exchange at $38.

Prepare the appropriate journal entries for each of the following cases. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)		A stock dividend of 7% is (1) declared and (2) issued.
(b)		A stock dividend of 100% is (1) declared and (2) issued.
(c)		A 2-for-1 stock split is (1) declared and (2) issued.

No.	Account Titles and Explanation	Debit	Credit
(a) (1)
(a) (2)
(b) (1)
(b) (2)
(c) (1)
(c) (2)

Answer 1

a. Journal Entry
Account Titles	Debit	Credit
Retained Earnings (288000 shares x 7% x $38)	$766,080
Common Stock dividend Distributable (288,000 shares x 7% x $10)		$201,600
Paid-in Capital in Excess of Par - Common Stock (BF)		$564,480
TO Record Declared Stock Dividend
Common Stock dividend Distributable (288,000 shares x 7% x $10)	$201,600.00
Common Stock		$201,600.00
To Record Stock issued

b. Journal Entry
Account Titles	Debit	Credit
Retained Earnings (288,000 shares x 100% x $38)	$10,944,000
Common Stock dividend Distributable (288000*100%*10)		$288,000
Paid-in Capital in Excess of Par - Common Stock		$10,656,000
TO Record Declared Stock Dividend
Common Stock dividend Distributable	$288,000.00
Common Stock		$288,000.00
To Record Stock issued

c. No Entry will be made for stock split