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.
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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