Question

Langley Corporation has 50,000 shares of $10 par value common stock outstanding. It declares a 15% stock dividend on December 1 when the market price per share is $16. The dividend shares are issued on December 31. Prepare the entries for the declaration and issuance of the stock dividend.

Answer 1

Date	Account Titles & Explanation	Debit$	Credit$
01 - Dec	Stock dividend A/C (50,000 * 15% * $16)	1,20,000
	To Stock Dividend Distributable A/C ( 50,000 * 15% * $10)		75,000
	To Paid in capital in excess of par - Common A/C Stock A/C( 50,000 * 15% * 6)		45,000
	( To record dividend declared)
31-Dec	Stock Dividend Distributable A/C	75,000
	To Common Stock A/C		75,000
	(To record stock Dividend Distributed)

Answer to the above question clearly shown in the explanation option