The stockholders' equity accounts of G.K. Chesterton Company have the following balances on...

Question:

The stockholders' equity accounts of G.K. Chesterton Company have the following balances on December 31, 2014.

Common stock, $10 par, 272,000 shares issued and outstanding$2,720,000
Paid-in capital in excess of par-common stock$1,264,000
Retained earnings$5,610,000

Shares of G.K. Chesterton Company stock are currently selling on the Midwest Stock Exchange at $38.

Prepare the appropriate journal entries for each of the following cases.

(a) A stock dividend of 6% is (1) declared and (2) issued.

(b) A stock dividend of 100% is (1) declared and (2) issued.

Stock Dividend:

Stock dividend refers to the nonmonetary benefit paid by a company to the common stockholders. Stock dividend is paid in the form of additional common stock paid to the existing shareholders.

Answer and Explanation: 1

(a)

(1)

ParticularsDebit ($)Credit ($)Calculation
Retained earnings620,160 272,000 * 6% * $38
Common stock dividend distributable 163,200
Paid in capital in excess of par 456,960


(2)

ParticularsDebit ($)Credit ($)
Common stock dividend distributable163,200
Common stock 163,200


(b)

(1)

ParticularsDebit ($)Credit ($)Calculation
Retained earnings2,720,000 272,000 * $10
Common stock dividend distributable 2,720,000


(2)

ParticularsDebit ($)Credit ($)
Common stock dividend distributable2,720,000
Common stock 2,720,000

Learn more about this topic:

Loading...
Cash Dividends & Dividend Payment

from

Chapter 16 / Lesson 1
5.8K

Dividends are incentives in the form of payments to shareholders of a company. Explore the different types of dividends and the standard method of payments that they occur in.


Related to this Question

Explore our homework questions and answers library