On September 15, 2013 the Scottie Company board of directors declared a 10% stoc

Question

On September 15, 2013 the Scottie Company board of directors declared a 10% stock dividend on common shares. The shares are to be distributed on October 10, 2013 to shareholders on record on October 1, 2013. The market price per share on the date of declaration was $24 while the market price on the date of distrubution was $26. The common stock has a par value of $5 per share are there were 1,000,000 shares outstanding prior to the declaration of the stock dividend.

Required:

Prepare and necessary journal entries to record the above transactions.

Explanation / Answer

Journal Entries

No of Common Shares 1000000 Dividend declaration rate 10% No of Stock Dividend shares 100000 Par Value per share 5 Stock Dividend declared 500000

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