Question

Flounder Corporation has outstanding 517,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $62 per share.

Prepare the journal entries for Flounder Corporation for both the date of declaration and the date of distribution. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Declaration Date
Distribution Date

SHOW LIST OF ACCOUNTS

Answer 1

WORKING NOTES:
		CALCULATION OF TOTAL VALUE OF STOCK DIVIDEND IS PAID
		Numer of Common Shares Issued and outstanding = (A)	5,17,000	Shares
		Stock Dividend Declared % of total shares issued and outstanding (B)	5%
		Stock Dividend Declared Shares to be issued (C = AXB)	25,850	Shares
		Market Value of 1 Shares on date of declaration (D)	$                             62	Per Shares
		Par Value of the one shares ('E)	$                             10	Per Shares
		Addittional Paid in Captial (Market Value - Par Value) (F)	$                             52	Per Shares
		Total value of dividend = (CXD)	$              16,02,700
		Par value of the Common Stock Dividend (CXE)	$                 2,58,500
		Value of Addittional paid in Capital (CXF)	$              13,44,200
SOLUTION :
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	----------	Stock Dividends	$16,02,700
		Stock Dividend Distributable		$2,58,500
		Addittional Paid in Capital - Common Stock		$13,44,200
		(To record the stock dividend declaration)
2	----------	Stock Dividend Distributable	$2,58,500
		Common Stock		$2,58,500
		(To record the stock dividend distribtion)