UBL Financial Group provides personal and commercial banking, wealth management
ID: 2575111 • Letter: U
Question
UBL Financial Group provides personal and commercial banking, wealth management services, insurance, and corporate and investment banking. On March 3, 2017, the company announced that its board of directors had declared a stock dividend, which has the same effect as a two-for-one split of its common shares. The board of directors also declared a quarterly common share cash dividend of $0.52 per share, which represents $0.26 per share on a post-stock dividend basis. This dividend of $0.26 per share, as well as the stock dividend, are payable on May 24, 2017, to common shareholders of record on April 25, 2017.
Required: 1. Prepare any journal entries that UBC Financial should make as the result of information in the preceding report. Assume that the company has 1.3 million shares outstanding with a market value of $13.25 per share and an average issue price of $5.60
1. Record declaration of stock dividend
2. Record declaration of cash dividend
3. Recod issuance of shares to current shareholders as common stock dividend
4. Recod payment of cash dividend
1. Record declaration of stock dividend
2. Record declaration of cash dividend
3. Recod issuance of shares to current shareholders as common stock dividend
4. Recod payment of cash dividend
1.Explanation / Answer
1. Stock dividend which are in the nature of stock split will not impact total market value of the company, hence only recorded at par value.
Entries:
Question Account Debit Credit Mar 3. 2017 Retained earnings 7280000 Stock dividend distributable 7280000 [ 1 new share issued for 1 share @5.6 per share] Mar 3. 2017 Retained earnings 676000 Cash dividend payable 676000 [ Dividend @0.52 per share for 1.3M shares] May 24. 2017 Stock dividend distributable 7280000 Common stock 7280000 [Stock dividend paid] May 24. 2017 Cash dividend payable 676000 Cash 676000 [Cash dividend paid]Related Questions
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