Cash and Stock Dividends Debra Corporation has 45.000 shares of $1 par value com

Question

Cash and Stock Dividends Debra Corporation has 45.000 shares of $1 par value common stock outstanding. The company has $375.000 of retained earnings. At year-end, the company declares a cash dividend of $2.00 per share and a six percent stock dividend. The market price of the stock at the declaration date is $45 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. 678 nciples 11 12 1 16 17 18 21 22 |23 26 27 28 General Journal Ref Description Debit Credit a. Cash dividends Finish attempt... Dividends payable To record declaration of cash dividend Stock dividends Stock dividend distributable Y Pald-in capital in excess of par value To record declaration of stock dividend.

Explanation / Answer

Journal entry :

Ref Description Debit credit a Cash dividend (45000*2) 90000 Dividend payable 90000 (To record cash dividend declared) b Stock dividend (45000*6%*45) 121500 Stock dividend distributable 2700 Paid in capital in excess of par value 118800 (To record declaration of stock dividend) c Dividend payable 90000 Cash 90000 (To record dividend paid) d Stock dividend distributable 2700 Common stock 2700 (To record stock distributed)

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