Vienna Corporation has 31,000 shares of $40 par common stock outstanding. On Jun

Question

Vienna Corporation has 31,000 shares of $40 par common stock outstanding. On June 8, Vienna Corporation declared a 4% stock dividend to be issued August 12 to stockholders of record on July 13. The market price of the stock was $47 per share on June 8.

Journalize the entries required on June 8, July 13, and August 12. For a compound transaction, if an amount box does not require an entry, leave it blank. If no entry is required, select "No Entry Required" and leave the amount boxes blank.

Explanation / Answer

Journal entries.

June 8

Reserve $ surplus A/c / P&L appropriation A/c Dr $ 49600

To 4% Share dividend A/c $49600

(Being dividend declared)

Note : as dividend is declared on 8 june so as on accrual basis transaction should record on june 8. Dividend calculated on 40 $ per share & not on $ 47 prevailing on june 8 because maket value is ir-relevant in dividend calculation hence paid on face value

Calculation of dividend value is :

Share outstanding =31000

Par value =40 $ per share

Hence 4% share dividend =31000*40*4%

=$49600

July 13 =no entry

Aug 12, 4% share dividend A/c Dr. $49600

To bank A/c $49600

( Being share dividend paid)

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.