Exercise 14-3 On January 1, 2017, Frontier Corporation had $1,420,000 of common

Question

Exercise 14-3 On January 1, 2017, Frontier Corporation had $1,420,000 of common stock outstanding that was issued at par. It also had retained earnings of $740,500. The company issued 40,500 shares of common stock at par on July 1 and earned net income of $410,000 for the year. Journalize the declaration of a 15% stock dividend on December 10, 2017, for the following independent assumptions. (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) Par value is $10, and market price is $18. (b) Par value is $5, and market price is $22.

Explanation / Answer

Answer:(a) Par value is $10, and market price is $18.

Dr Retained earnings 492750 (27375 x 18)
Cr Common stock dividends distributable 273,750 (new shares x par value)
Cr Paid-in cap in excess of par value 219,000

Answer:(b)  Par value is $5, and market price is $22.

The co. had 324500 shares of common stock to start with. 15% stock dividend will result in 48675 new shares

Dr Retained earnings 1070850
Cr Paid-in cap in excess of par value 827475
Cr Common stock dividends distributable 243375

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