Question

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.

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