Common stock-$10 par value, 150,000 shares authorized, 63,000 shares Issued and

Question

Common stock-$10 par value, 150,000 shares authorized, 63,000 shares Issued and outstanding $ 630,000 525,000 675,000 $ 1830.000 Pald-in capital Iin excess of par value, common stock Retained earnings Total stockholders' equity On February 5, the directors declare 4% stock div dend distributab stock's market value is $46 per share on February 5 before the stock dividend. The stocks market value is $40 per share on February 28. le on February 28 to the February 15 stockholders of record. The value Required information 2.85 points 1. Prepare entries to record both the dividend declaration and its distribution View transaction list Journal entry worksheet Record the declaration of 14% stock dividend. Note: Enter debits before credits Debit Credit Feb 05

Explanation / Answer

1. Journal Entry Date Particular Debit Credit 05-Feb Retained Earning (150000*$46*14%) $966,000 Dividend Payable (150000*$10*14%) $210,000 Paid in Capital in excess of Par $756,000 To Record Declaration of Dividend 28-Feb Dividend Payable $210,000 Cash $210,000 2. Computation of Book Value per Share before and After dividend Before Dividend Total Stock Holder's Equity $1,830,000.00 No. oF share Outstanding              150,000 Book Value/Share ( $1830000/150000) $12.20 After Dividend Total Stock Holder's Equity $1,830,000.00 Total Share After Dividend (150000+(150000*14%)) 171000 Book Value/Share ( $1830000/171000) $10.70 Total Book Value of 35 Share before Dividend (350 Shares*$12.2) $4,270.00 Total Book Value of 35 Share before Dividend $470.00 (350 *114%)*$10.70 3. Computation of Market Value of Share Market Value/ share on 5th February $46 No of Share before dividend with Investor 350 Market Value of Share on 5th February $16,100 Market Value/ share on 28th February $40 No of Share before dividend with Investor 399 Market Value of Share on 28th February $15,960

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