Question

On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on...

On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 25,000, $16 par, common shares. The market price of the common stock is $45 on this date. Required: 1. 2. & 3.

Record the necessary journal entries assuming a small (10%) stock dividend, a large (100%) stock dividend, and a 2-for-1 stock split.

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Answer #1
Answer
Colorado Outfitters, Inc.,
Date Account Titles and Explanation Debit Credit
Sep-01 Stock dividends ((25,000 * 10%) * $ 45) $ 1,12,500
Common stock ((25,000 * 10%) * $ 16) $ 40,000
Additional paid in capital $ 72,500
(To record Declaration of small (10%) stock dividend)
Sep-01 Stock dividends ((25,000 * 100%) * $ 16) $ 4,00,000
Common stock $ 4,00,000
(To record Declaration of large (100%) stock dividend)
Sep-01 No journal entry required.
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