In: Accounting
The following data were taken from the SFP accounts of Bramble Corporation on December 31, 2020:
Current assets | $ | 1,035,000 | |
FV-NI investments | 842,000 | ||
Common shares (unlimited authorized, 590,000 shares issued and outstanding) | 6,490,000 | ||
Contributed surplus | 360,000 | ||
Retained earnings | 1,790,000 |
A 8% stock dividend is declared at their fair value and distributed at a time when the shares’ fair value is $51 per share. Prepare the required journal entries. (Credit account titles are automatically indented when the 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 |
(To record stock dividend declaration) |
||
(To record stock dividend distribution) |
A 3-for-1 stock split is effected. Prepare the required journal entry. (Credit account titles are automatically indented when the 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 |
A dividend in kind is declared on January 8, 2021 and paid on January 28, 2021 in FV-NI investments. The investments have a carrying amount of $140,000 (fair value at December 31, 2020) and a January 8 fair value of $148,000. Prepare the required journal entries. (Credit account titles are automatically indented when the 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.)
Date |
Account Titles and Explanation |
Debit |
Credit |
Jan. 8 |
|||
(To record fair value adjustment) |
|||
Jan. 8 |
|||
(To record declaration of property dividend) |
|||
Jan 28 |
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SOLUTION : 1 | ||||
CALCULATION OF TOTAL VALUE OF STOCK DIVIDEND IS PAID | ||||
Numer of Common Shares Issued and outstanding = (A) | 590,000 | Shares | ||
Stock Dividend Declared % of total shares issued and outstanding (B) | 8% | |||
Stock Dividend Declared Shares to be issued (C = AXB) | 47,200 | Shares | ||
Market Value of 1 Shares on date of declaration (D) | $ 51.00 | Per Shares | ||
Par Value of the one shares ($ 6,490,000 / 590,000) ('E) | $ 10.85 | Per Shares | ||
Addittional Paid in Captial (Market Value - Par Value) (F) | $ 40.15 | Per Shares | ||
Total value of dividend = (CXD) | $ 2,407,200 | |||
Par value of the Common Stock Dividend (CXE) | $ 512,000 | |||
Value of Addittional paid in Capital (CXF) | $ 1,895,200 | |||
Journal Entries | ||||
Sr. No. | Date | Account Title and explanation | Debit | Credit |
1 | ---------- | Stock Dividends | $ 2,407,200 | |
Stock Dividend Distributable | $ 512,000 | |||
Paid in Capital in Excess of Par - Common Stock | $ 1,895,200 | |||
(To record the stock dividend declaration) | ||||
3 | ---------- | Stock Dividend Distributable | $ 512,000 | |
Common Stock | $ 512,000 | |||
(To record the stock dividend distribtion) | ||||
SOLUTION : 2 | ||||
Journal Entries | ||||
Sr. No. | Date | Account Title and explanation | Debit | Credit |
1 | ---------- | |||
"No Entry" is required for Stock Split. | ||||
In Stock split only par value is reduced in same proportion of split and number | ||||
of shares are increases. | ||||
SOLUTION : 3 | ||||
Journal Entries | ||||
Sr. No. | Date | Account Title and explanation | Debit | Credit |
1 | Jan.08 | Investment | $ 8,000 | |
Gain on Appreciation on investment | $ 8,000 | |||
(To record the value of adjustement) | ||||
2 | Jan.08 | Retained Earnings | $ 148,000 | |
Property Dividend Payable | $ 148,000 | |||
(To record the Property dividend declaration) | ||||
3 | Jan.28 | Property Dividend Payable | $ 148,000 | |
Investment | $ 148,000 | |||
(To record the distribtion of Property Dividend) | ||||