12. 10.00 points Adams Moving and Storage, a family-owned corporation, deciared

Question

12. 10.00 points Adams Moving and Storage, a family-owned corporation, deciared a property dividend of 500 shares of GE common stock that Adams had purchased in February for $13,500 as an investment. GE's shares had a market value of $25 per share on the declaration date Prepare the journal entries to record the property dividend on the declaration and payment dales. gt no entry is required for a transactionlevent, select "No journal entry required" in the first account field.) 1Record adjustment of stock to fair value 2 Record the journal entry on the declaration date. Record the journal entry on the payment date Note journal entry has been entered Record entry View general journal 20 888 &E; 2 3 4

Explanation / Answer

Requirement 1 Date Account Title and Explanation Debit Credit Loss on investment $13,500 (500 × $25) $1,000              Investment in GE stock $1,000 To record fair value adjustment Retained earnings (500 × $25) $12,500                Property dividends payable $12,500 To record property dividends declared Property dividends payable $12,500                 Investment in GE stock $12,500 To record property dividends paid Requirement 2 Date Account Title and Explanation Debit Credit Cash (4.5 million shares × $13.068) $58,806,000                   Common stock (4.5 million shares × $0.001) $4,500                    Paid-in capital in excess of par $58,801,500 To record issurance of the company one stock Cash (9 million shares × $13.20) $118,800,000                   Common stock (9 million shares × $0.01) $90,000                    Paid-in capital in excess of par $118,710,000 To record issurance of the company two stock

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