Prepare Journal Entries in good form for the following (unrelated) equity transa
ID: 2437395 • Letter: P
Question
Prepare Journal Entries in good form for the following (unrelated) equity transactions:
1) Billbo Company issues 1,000 $.01 par stock for $10 cash per share on February 1st.
2) Conner's directors declare a 10% stock dividend on December 31st. This stock dividend of 500 shares, computed as %10 of its 5,000 outstanding shares, is to be distributed on January 20 to stockholders of record on January 15th. The market price of the stock on December 31st. is $15.
3) David Company's board of directors declares a $1 per share cash dividend on the 1,000 outstanding shares on January 9th.
Explanation / Answer
Solution:
Journal Entries Event Date Particulars Debit Credit 1 1-Feb Cash Dr $10,000.00 To Common stock $10.00 To Paid in capital in excess of par - common stock $9,990.00 (To record issue of common shares) 2 31-Dec Stock dividends Dr $7,500.00 To Common stock dividend distributable $7,500.00 (To record declaration of stock dividend) 3 20-Jan Common stock dividend distributable Dr $7,500.00 To Common stock $5.00 To Paid in capital in excess of par - common stock $7,495.00 (To record distribution of stock dividend) 4 9-Jan Dividends Dr $1,000.00 To Dividend payable $1,000.00 (To record declaration of cash dividend)