On August 263, Bentley Corporation\'s board of direction declared a 2 percent st

Question

On August 263, Bentley Corporation's board of direction declared a 2 percent stock dividend applicable to the outstanding shares of its $5 par value common stock, of which 150,000 shares are authorized, 130,000 are issued, and held in the treasury. The stock dividend was distributable on September 25 to stockholders of record on September 10. On August zo, tne market value of the common stock was S12 per share. On November 26, the board of directors declared a $0.20 per share cash dividend. No other stock transactions have occurred. Record the transactions on August 26, September, 10, September 25, and November 26. Make the December 31 entry to close Cash Dividends Declared and Stock Dividends Declared to Retained Earnings.

Explanation / Answer

date description debit credit sep 10 retained earnings (130000*2%) 2600*12 31200 to provision for stock dividend 31200 being provision for stock dividend made 25 sep provisio for stock dividend 31200 common stock 2600*5 13000 premium on stocks 2600* (12-5) 18200 stock dividend issued 26 nov dividend on shares (130000+2600)*0.2 26520 provision for dividend 26520 being provision for cash dividend provided 26 sep provision for dividend 26520 cash/bank 26520 being cash dividend paid 31 dec profit and loss account 26520 dividend on shared 26520 being dividend transfed to profit and loss account

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