PharmGen, a pharmaceutical company, was founded two years ago. Like most pharmac
ID: 2442412 • Letter: P
Question
PharmGen, a pharmaceutical company, was founded two years ago. Like most pharmaceutical companies, PharGen did not make any profits in its first two years of operations since the company spent heavily on research and development. However, in order to attract investors, the company would like to issue a 5% stock divident this year.
PharmGen currently has 15,000 shares of common stock, and no preferred stock outstanding. The stock, which has a par value of $2.00, was initially issued at $12 per share. Currently, the stock is trading a $20 per share. Prepare journal entries for the %5 stock .
I have retained earnings debited for 300,000/ Common Stock for 750 , and Additional Paid in Capital-Common Stock credited for 299,250
15,000 x $20 current trading = 300,000 15,000 x 5% stock dividend = 750 300,000-750=299,250
Can't figure out what im doing wrong to solve this problem. My answers are wrong.
Explanation / Answer
Retained Earnings(15,000*$20) 300,000 debit Common Stock Div Distribut. 1500 credit (15000*5%*$2)=750*$2=1500 Paid in Cap Exc of par -common 298,500 credit