Cash and Stock Dividends Debra Corporation has 30.000 shares of $1 par value com

Question

Cash and Stock Dividends Debra Corporation has 30.000 shares of $1 par value common stock outstanding. The company has $250.000 of retained earnings. At year-end. the company declares a cash dividend of $2.00 per share and a five percent stock dividend. The market price of the stock at the declaration date s $30 per share. Three weeks later, the company pays the dividends. a. Prepare the journal entry for the declaration of the cash dividend b. Prepare the journal entry for the declaration of the stock dividend c. Prepare the journal entry for the payment of the cash dividend. d. Prepare the journal entry for the payment of the stock dividend. General Journal

Explanation / Answer

Ref Description Debit Credit a) Retained earnings 60,000 Dividends payable (30,000*2) 60,000 b) Retained earnings (30000*5%)*30 45000 Stock dividend distributable (1500*1) 1,500 paid in capital in excess of par value 43500 c) dividends payable 60,000 cash 60,000 d) Stock dividend distributable 1,500 Common stock 1,500

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