Question

The stockholders’ equity accounts of G.K. Chesterton Company have the following balances on December 31, 2020....

The stockholders’ equity accounts of G.K. Chesterton Company have the following balances on December 31, 2020.

Common stock, $10 par, 300,000 shares issued and outstanding $3,000,000
Paid-in capital in excess of par—common stock 1,200,000
Retained earnings 5,600,000


Shares of G.K. Chesterton Company stock are currently selling on the Midwest Stock Exchange at $37.

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 5% 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.

Homework Answers

Answer #1

a) Journal entry

No General Journal Debit credit
1 Stock dividend (300000*5%*37) 555000
Common Stock dividend distributable 150000
Paid in capital in excess of par value-Common Stock 405000
2 Common Stock dividend distributable 150000
Common Stock 150000

b) Journal entry

No General Journal Debit credit
1 Stock dividend (300000*100%*10) 3000000
Common Stock dividend distributable 3000000
2 Common Stock dividend distributable 3000000
Common Stock 3000000

c) Journal entry

No General Journal Debit credit
1 No Journal entry
2 No Journal entry
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