Question

# The shareholders' equity of Ava Company on January 1, 2017, included the following: Common stock, \$0.5...

The shareholders' equity of Ava Company on January 1, 2017, included the following:

 Common stock, \$0.5 par; authorized, 800,000 shares; You will need to calculate the issued shared \$252,506 Paid-in capital—excess of par 65,844 Retained earnings \$500,000

On April 1, 2017, the board of directors of Ava declared a 7% stock dividend on common shares, to be distributed on June 1. The market price of Ava’s common stock was \$10 on April 1, 2016, and \$16 on June 1, 2016.

On April 1, the credit to Common Stock is \$________

On April 1, 2017, the board of directors of Ava declared a 7% stock dividend on common shares,

Number of stock dividend = 800000 * 7% = 56000 share

Journal entry on April 1, 2017, like

Retained earnings Dr (56000*10)               \$560000

Common stock distribution Cr (56000*0.50)      \$28000

Paid-in capital—excess of par Cr (560000-28000) \$532000

On April pass the above entry, create a new account Common stock distribution, and the par amount is credit to this account

On April 1, the credit to Common Stock is \$0

After declaration, common shares, to be distributed on June 1, 2017,

So entry on that date

Common stock distribution Dr   \$28000

Common stock Cr             \$28000

On June 1, the credit to Common Stock is \$28000

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