Question

Cash Dividends, Stock Dividend, and Stock Split

During the year ended December 31, 20--, Choi Company completed the following transactions:

Apr. 15	Declared a semiannual dividend of $1.4 per share on preferred stock and $0.3 per share on common stock to shareholders of record on May 5, payable on May 10. Currently, 6,100 shares of $50 par preferred stock and 79,200 shares of $1 par common stock are outstanding.
May 10	Paid the cash dividends.
Oct. 15	Declared semiannual dividend of $1.4 per share on preferred stock and $0.3 per share on common stock to shareholders of record on November 5, payable on November 20.
Nov. 20	Paid the cash dividends.
22	Declared a 10% stock dividend to common shareholders of record on December 8, distributable on December 16. Market value of the common stock was estimated at $5 per share.
Dec. 16	Issued certificates for common stock dividend.
20	Board of directors declared a two-for-one common stock split.

Required:

Prepare journal entries for the transactions. If an amount box does not require an entry, leave it blank.

Page: 1

	DATE	ACCOUNT TITLE	DOC. NO.	POST. REF.	DEBIT	CREDIT
1	Apr. 15						1
2							2
3							3
4							4
5	May 10						5
6							6
7							7
8							8
9	Oct. 15						9
10							10
11							11
12							12
13	Nov. 20						13
14							14
15							15
16							16
17	Nov. 22						17
18							18
19							19
20							20
21	Dec. 16						21
22							22
23							23

Board of directors of Choi Company declared a two-for-one common stock split.

How is this transaction recorded in the books of Choi Compnay?

Answer 1

	Date	Account title				Debit	Credit
	15-Apr	Cash dividend				32300
		dividends payable-PS					8540
		dividends payable-CS					23760
		(6100*1.4 -PS + $0.3*79200)
	10-May	dividends payable-PS				8,540
		dividends payable-CS				23,760
		Cash					32,300
	15-Oct
		Cash dividend				32300
		dividends payable-PS					8540
		dividends payable-CS					23760
		(6100*1.4 -PS + $0.3*79200)
	20-Nov	dividends payable-PS				8,540
		dividends payable-CS				23,760
		Cash					32,300
	22-Nov	Stock dividend				39600
		Common stock dividend distributable					7920
		paid in capital in excess of par					31680
		(79200*10%*5)
	16-Dec	Common stock dividend distributable				7,920
		common stock.					7,920
	20-Dec	No entry
		(only stock will double and par value will halve)
		that is 174240 common stock at $0.5 par value)