E13-28 (similar to Question Help Martial Arts Schools, Inc. is authorized to iss

Question

E13-28 (similar to Question Help Martial Arts Schools, Inc. is authorized to issue 200,000 shares of $3 par common stock. The company issued 71,000 shares at $3 per share. When the market price of common stock was $5 per share, Martial Arts declared and distributed a 6% stock dividend. Later, Martial Arts declared and paid a $0.60 per share cash dividend Read the requirements. Requirement1. Journalize the declaration and the distribution of the stock dividend. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) First, journalize the declaration of the stock dividend. Date Accounts and Explanation Debit Credit

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Retained earnings a/c (71000*6%*5) 21300 Common stock dividend distributable a/c 12780 Paid in capital in excess of par value-common stock 8520 (To record declaration of stock dividend) Common stock dividend distributable a/c 12780    Common stock a/c 12780 (To record stock dividend distributed)

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