Required information Exercise 11-6 Stock dividends and per share book values LO

Question

Required information

Exercise 11-6 Stock dividends and per share book values LO P2

[The following information applies to the questions displayed below.]

The stockholders’ equity of TVX Company at the beginning of the day on February 5 follows:

On February 5, the directors declare a 16% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $35 per share on February 5 before the stock dividend. The stock’s market value is $30 per share on February 28.

Exercise 11-6 Part 1

1. Prepare entries to record both the dividend declaration and its distribution.

Common stock—$5 par value, 150,000 shares
authorized, 51,000 shares issued and outstanding $ 255,000 Paid-in capital in excess of par value, common stock 525,000 Retained earnings 675,000 Total stockholders’ equity $ 1,455,000

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Feb 5 Stock dividend (51000*16%*35) 285600 Common Stock dividend distributable 40800 Paid in capital in excess of par value-Common Stock 244800 (To record Stock dividend declaration) Feb 28 Common Stock dividend distributable 40800 Common Stock 40800 (To record dividend distribution)

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