Question

On October 1, 2021, Helmsmith Corporation declared and issued a 10% common stock dividend. Before this date,
Helmsmith had 80,000 shares of $1 par common stock outstanding. The market price of Helmsmith Corporation’s
common stock on the date of declaration was $10 per share.
Required
Show Helmsmith’s journal entries to record the common stock dividend on:
1) The date of declaration
2) The date of record
3) The date of distribution/payment

Answer 1

Journal
Date	Account Titles and Description	Debit	Credit		Calculation
Date of declaration	Retained Earnings	Dr	80,000			80,000 * $10 *10%
	To	Dividend payable			80,000
	(Being stock dividend declared @ 10% of common shares
	to be issued at a premium of $9 per share)
Date of record	No entry required
Date of distribution	Dividend payable	Dr	80,000			80,000 * $10 *10%
	To	Common Stock			8,000		80,000 * $1 *10%
	To	Additional paid in capital - Common Stock		72,000		80,000 * $ *10%
	(Being dividend declared distributed issuing 8,000 shares of
	$1 each at a premium of $9 per share)