The following account balances appear on the balance sheet of Osgood Industries:
ID: 2410211 • Letter: T
Question
The following account balances appear on the balance sheet of Osgood Industries:
The board of directors declared a 2% stock dividend when the market price of the stock was $135 per share.
*Refer to the Chart of Accounts for exact wording of account titles.
Stock Dividends
Determine the following amounts before the stock dividend was declared:
Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year:
Journalize the entries to record the declaration of the dividend, capitalizing an amount equal to market value on December 31. Refer to the Chart of Accounts for exact wording of account titles.
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Journalize the entries to record the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles.
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Explanation / Answer
Date Accounts Title Post ref Dr Cr a Stock Dividend 352 $270,000 Stock Dividend Distributable 336 $270,000 (being stock dividend declred) No. of stodk=100000*2%=2000 Stock dividend=2000*135 270000 b Stock Dividend Distributable 336 $270,000 Common stock (2000*100) 321 200000 Paid-In Capital in Excess of Par—Common Stock 322 $70,000 (being stock dividend distributed) Before stock dividend declared 2) Total paid-in capital (10000000+2000000) 12000000 Total retained earnings 45000000 Total stockholders’ equity 57000000 Closing entry Retained Earnings 340 $270,000 Stock dividend 352 $270,000 After stock dividend Total paid-in capital (10000000+2000000+270000) 12270000 Total retained earnings (45000000-270000) 44730000 Total stockholders’ equity 57000000 If any doubt please comment