Problem 11-249 [LO 11-3] Company Z has 2.85 million shares of common stock autho
ID: 2578888 • Letter: P
Question
Problem 11-249 [LO 11-3]
Company Z has 2.85 million shares of common stock authorized with a par value of $1 and a market price of $67. There are 1.425 million outstanding shares and 0.35625 million shares held in treasury stock.
a.
Prepare the journal entry if the company declares and distributes a 10% stock dividend. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars and not in millions.)
b.
Show the effect of the 10% stock dividend on assets, liabilities, and stockholders' equity. (Enter all amounts as positive values. Enter your answers in dollars and not in millions.)
c.
Prepare the journal entry if the company declares and distributes a 100% stock dividend. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars and not in millions.)
d.
Show the effect of the 100% stock dividend on assets, liabilities, and stockholders' equity. (Enter all amounts as positive values. Enter your answers in dollars and not in millions.)
Explanation / Answer
a Retained earnings 7160625 =(1425000-356250)*10%*67 Common stock 106875 =(1425000-356250)*10%*1 Paid in capital in excess of par-Common stock 7053750 b Assets Liabilities Stockholders' equity 0 0 Paid in capital +7160625 Retained earnings -7160625 c Retained earnings 1068750 =(1425000-356250)*100%*1 Common stock 1068750 d Assets Liabilities Stockholders' equity 0 0 Paid in capital +1068750 Retained earnings -1068750