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Tamarisk Corporation has outstanding 125,000 shares of $10 par value common stock. The corporation declares the...

  1. Tamarisk Corporation has outstanding 125,000 shares of $10 par value common stock. The corporation declares the following stock dividends when the fair value of the stock is $65 per share.

    Prepare the journal entries for Tamarisk Corporation for both the date of declaration and the date of distribution.
  1. Stock dividend is 15%
  2. Stock dividend is 70%

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Expert Solution

Journal entries for Tamarisk Corporation for both the date of declaration and the date of distribution
PARTICULARS DEBIT ($) CREDIT ($)
a. Stock dividend is 15%
Date of declaration
Retained Earnings (125,000 shares *15%*$65)      1,218,750.00
Paid-in Capital in Excess of Par (12,18,750-187,500)      1,031,250.00
Common Stock Dividend Distributable (125,000 shares*15%*10)        187,500.00
Date of distribution
Common Stock Dividend Distributable        187,500.00
Common Stock        187,500.00
b. Stock dividend is 70%
Date of declaration
Retained Earnings (125,000 shares *70%*$65)      5,687,500.00
Paid-in Capital in Excess of Par (5,687,500-8,75,000)      4,812,500.00
Common Stock Dividend Distributable (125,000 shares*70%*10)        875,000.00
Date of distribution
Common Stock Dividend Distributable        875,000.00
Common Stock        875,000.00

ekkarill92 answered 2 hours ago
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