Question

Exercise 15-14

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

Common stock, $10 par, 298,000 shares issued and outstanding		$2,980,000
Paid-in capital in excess of par—common stock		1,280,000
Retained earnings		5,840,000

Shares of Carla Company stock are currently selling on the Midwest Stock Exchange at $35.

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 8% 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.

Answer 1

Date	Title	Debit	Credit
a)	Stock dividend distributable (298,000*$10*8%)	$     238,400
	Additional paid in capital (298,000*$25*8%)	$     596,000
	Retained Earnings		$     834,400
	(To record declaration of stock dividend at 8%)
	Common stock	$     238,400
	Stock dividend distributable		$     238,400
	(To record issue of shares against stock dividend)
b)	Stock dividend distributable ($10*298,000)	$ 2,980,000
	Retained Earnings		$ 2,980,000
	(To record declaration of stock dividend at 100%)
	Common stock	$ 2,980,000
	Stock dividend distributable		$ 2,980,000
	(To record issue of shares against stock dividend)

C. Journal entry not required for stock split.