Question

University Food Systems Inc. has issued a 30 percent stock dividend. The company has 832,000 common...

University Food Systems Inc. has issued a 30 percent stock dividend. The company has 832,000 common shares authorized and 240,000 shares issued and outstanding. The common shares account had a balance of $3,600,000 on the date of declaration of the stock dividend, and the market value was $16 per share.

Prepare the journal entry for the issuance of this stock dividend. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Homework Answers

Answer #1
Par value of Share
Common Stock account balance 36,00,000
Divide: Number of shares outstanding 2,40,000
Par value of Share 15
Shares outstanding 2,40,000
Multiply: % of stock dividend 30%
Number of stock dividned 72000
Multiply: Par value of share 15
Amount of stock dividend 1080000
Journal entries
S.no. Accounts title and explanations Debit $ Credit $
a. Retained earnings 10,80,000
   Stock dividend distributable 10,80,000
(for dividend declared)
b. Stock dividend distributable 10,80,000
     Common Stock capital 10,80,000
(for shares issued as dividend)
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