On June 13, the board of directors of Siewert Inc. declared a 5% stock dividend

Question

On June 13, the board of directors of Siewert Inc. declared a 5% stock dividend on its 40 million, $2 par, common shares, to be distributed on July 1 The market price of Siewert common stock was $18 on June 13. Complete the below table to calculate the stock dividend. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Prepare the journal entry to record the stock dividend. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Explanation / Answer

Answer 1. Stock Dividend No. of Outstanding Shares                           40 Stock Dividend percentage 5% No. of Shares to be issued                             2 Market Price of Share                           18 Value of Stock Dividend                           36 Answer 2. Journal Entry Date Particulars Dr. Amt Cr. Amt Jun-13 Retained Earnings                              Dr.                           36    To Stock Dividend Payable                        36 (Record the Stock dividend declared) Jul-01 Stock Dividend Payable                   Dr.                           36    To Common Stock                           4    To Paid in Capital - Excess of Par                        32 (Record the Common Stock issued as stock dividend)

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