Question

Douglas McDonald Company’s balance sheet included the following shareholders’ equity accounts at December 31, 2020: ($...

Douglas McDonald Company’s balance sheet included the following shareholders’ equity accounts at December 31, 2020:

($ in millions)
Paid-in capital:
Common stock, 1,700 million shares at $1 par $ 1,700
Paid-in capital—excess of par 17,400
Retained earnings 16,088
Total shareholders’ equity $ 35,188


On March 16, 2021, a 4% common stock dividend was declared and distributed. The market value of the common stock was $37 per share. Fractional share rights represented 3 million equivalent whole shares. Cash was paid in lieu of the fractional share rights.

Required:
1. Complete the below table to calculate the value of shares issued.
2. Prepare the appropriate entries for the declaration and distribution of the stock dividend.

Business   Accounting   
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Homework Answers

Answer #1

Calculation table

Particulars
Number of outstanding shares 1700(millions)
Stock dividend percentage 4%
Number of share issued 68(millions)
Market price per share $37
Value of stock dividend $2516(68 millions X $37)
Amount paid in cash for fractional shares 0
Value of stock dividend

$2516 millions

​​​​​​Journal enties

Account and explanation Debit in $ millions Credit in $ millions
Stock dividend 2516
Common Stock dividend distributable 68
Paid in capital in excess of par value-Common Stock 2448
(To record stock dividend declared)
Common Stock dividend distributable 68
Common Stock 68
(To record common stock distributed)

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