Question

dolan Company has 500,000 shares of $10 par value common stock outstanding During the year Hernandez declared a 30% stock dividends when the market price of this passage $50 per share make the journal entry to record this after his record the distribution of shares report the year end closing entry

Answer 1

Answer:

Given:

Shares no of : 500000

Par value @ $10

Dividend Declared @ 30%

current market share price @ $50.

Journal Entry for declaration and distribution  of Dividends:

Retained Earnings a/c -Dr 7500000

To common stock 150000

To Capital Excess in Par 7350000

(No of shares*price*dividend%)

(Being Dividend to be declared for shareholders) .

For your easy understandability:

Clear cut explanation entry:

For Declaration of Dividend:

Retained Earnings a/c - Dr 7500000

To Stock dividend distributable a/c 7500000

For Distribution of Dividend:

Stock dividend distributable a/c - Dr 7500000

To Common Stock 5000000

To Paid in excess of capital at par 2500000

(500000 shares * 0.30 * $50).