Question

Exercise 4 Entries for stock dividend

PT Senja Pertama is an Health Maintenance Organization (HMO) for business in the Surabaya area. The following account balances appear on the statement of financial position of PT Senja Pertama: Common stock (800,000 shares authorized; 500,000 shares issued), Rp4,000 par, Rp2,000,000; paid-in capital in excess of par-common stock, Rp1,000,000,000, and Retained Earnings, Rp33,500,000,000. The board of directors declared a 2% stock dividend when the market price of the stock was Rp13,000 a share. PT Senja Pertama reported no income or loss for the current year.

a-Journalize the entries to record (1) the declaration of the dividend, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates.

b-Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholder’s equity.

c-Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital (2) total retained earnings, and (3) total stockholders’ equity.

Answer 1