Exercise 10-10 Record stock dividends and stock splits (LO6) On September 1, the
ID: 2451811 • Letter: E
Question
Exercise 10-10 Record stock dividends and stock splits (LO6) On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 19,000, $10 par, common shares. The market price of the common stock is $39 on this date.
Required: 1. Record the stock dividend assuming a small (10%) stock dividend. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Record the stock dividend assuming a large (100%) stock dividend. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
3. Record the stock dividend assuming a 2-for-1 stock split. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Explanation / Answer
3. The only journal entry needed for stock split is a memo entry only and not a journal entry with debits and credits.
Date Account Titles and Explanation Debit Credit 1-Sep Retained Earnings (19,000 x 10% x $39 each) $74,100 Common Stock (19,000 x 10% x $10 each) $19,000 Additional Paid-In Capital (19000 x 10% x $29 each) $55,100 (Being small stock dividend issued) 1-Sep Retained Earnings (19,000 x $10 each) $190,000 Common Stock (19,000 x $10 each) $190,000 (Being large stock dividend paid i.e. 100%)Related Questions
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