Question

Exercise 15-14 The stockholders’ equity accounts of Waterway Company have the following balances on December 31, 2017. Common stock, $10 par, 304,000 shares issued and outstanding $3,040,000 Paid-in capital in excess of par—common stock 1,290,000 Retained earnings 5,340,000 Shares of Waterway Company stock are currently selling on the Midwest Stock Exchange at $40.

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

(a) A stock dividend of 7% is (1) declared and (2) issued.

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

(c) A 2-for-1 stock split is (1) declared and (2) issued.

Answer 1

		Debit	Credit
a(1)	Retained Earnings	851200		=304000*7%*40
	Common Stock Dividend Distributable		212800	=304000*7%*10
	Paid-in Capital in Excess of Par-common		638400
a(2)	Common Stock Dividend Distributable	212800
	Common Stock		212800
b(1)	Retained Earnings	3040000		=304000*100%*10
	Common Stock Dividend Distributable		3040000
b(2)	Common Stock Dividend Distributable	3040000
	Common Stock		3040000
c(1)	No Entry	0
	No Entry		0
c(2)	No Entry	0
	No Entry		0