The shareholders’ equity of Core Technologies Company on June 30, 2020, included the following: Common stock,...

The shareholders’ equity of Core Technologies Company on June 30, 2020, included the following:


Common stock, $1 par; authorized, 8 million shares; issued and outstanding, 4 million shares	$	4,000,000
Paid-in capital—excess of par		12,000,000
Retained earnings		34,000,000

On April 1, 2021, the board of directors of Core Technologies declared a 25% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies’ common stock was $30 on April 1, 2021, and $40 on June 1, 2021.

Required:
1. Prepare the journal entry to record the stock dividend if the company treats the distribution as normal stock dividends.

2. Prepare the journal entry to record the stock dividend if the company treats the distribution as "large" stock dividends effected in the form of a stock dividend.

3. Prepare the journal entry to record the stock dividend if the company treats the distribution as a stock split.

Solutions

Expert Solution

1. Normal stock dividends:

Date	Account title and explanation	Debit
Apr 1,2021	Stock dividends [(8,000,000 x 25%) x $30 Market price]	$60,000,000
	Common stock dividend distributable [(8,000,000 x 25%) x $1 par]
	Paid-in capital-excess of par
	[To record declaration of stock dividends]

June 1,2021	Common stock dividend distributable	$2,000,000
	Common stock
	[To record distribution of stock dividends]

2.Large Stock dividends:

Date	Account title and explanation	Debit	Credit
Apr 1,2021	Stock dividends	$2,000,000
	Common stock dividend distributable [(8,000,000 x 25%) x $1 par]		$2,000,000
	[To record declaration of stock dividends]

June 1,2021	Common stock dividend distributable	$2,000,000
	Common stock		$2,000,000
	[To record distribution of stock dividends]

3. No Entry for stock split

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The shareholders’ equity of Core Technologies Company on June 30, 2020, included the following: Common stock,...

The shareholders’ equity of Core Technologies Company on June 30, 2020, included the following: Common stock, $1 par; authorized, 6 million shares; issued and outstanding, 2 million shares $ 2,000,000 Paid-in capital—excess of par 8,000,000 Retained earnings 9,000,000 On April 1, 2021, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies’ common stock was $22 on April 1, 2021, and $32 on...

National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...

National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 7 million shares at $1 par $ 7,000,000 Paid-in capital—excess of par 63,000,000 Retained earnings 95,500,000 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February 15, 2021 Reacquired...

National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...

National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 5 million shares at $1 par $ 5,000,000 Paid-in capital—excess of par 30,000,000 Retained earnings 98,500,000 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February 15, 2021 Reacquired...

The shareholders’ equity of Proactive Solutions, Inc., included the following at December 31, 2021: Common stock, $1 par

The shareholders’ equity of Proactive Solutions, Inc., included the following at December 31, 2021: Common stock, $1 par Paid-in capital—excess of par on common stock 7% cumulative convertible preferred stock, $100 par value Paid-in capital—excess of par on preferred stock Retained earnings Additional Information: • Proactive had 7 million shares of preferred stock authorized of which 2 million were outstanding. All 2 million shares outstanding were issued in 2015 for $112 a share. The preferred stock is convertible into common...

National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in...

National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in millions) Common stock, 4 million shares at $1 par $ 4,000,000 Paid-in capital—excess of par 16,000,000 Retained earnings 73,000,000 Required: 1a. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February...

National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in...

National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in millions) Common stock, 3 million shares at $1 par $ 3,000,000 Paid-in capital—excess of par 9,000,000 Retained earnings 71,500,000 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February...

National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in...

National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in millions) Common stock, 7 million shares at $1 par $ 7,000,000 Paid-in capital—excess of par 63,000,000 Retained earnings 95,500,000 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February...

The company's total shareholders' equity as of 12/31/2020 is $1,777,000 Common stock; par value of $2;...

The company's total shareholders' equity as of 12/31/2020 is $1,777,000 Common stock; par value of $2; Auth 500,000 and issued/outstanding 100,000 @ an average issue price of $4.75. Accumulted other comprehensive income is $180,000. The balance in shareholders' equity is retained earnings. During 2021: Sales revenue $880,000, interest revenue $30,000 ; rent revenue $160,000; Dividend Revenue $80,000; sales Returns & Allowances $25,000; Sales discounts $70,000; COGS $350,000; Selling exp $100,000; General Administrative expenses $80,000; Interest expense $70,000; Loss on sale...

Douglas McDonald Company’s balance sheet included the following shareholders’ equity accounts at December 31, 2020:

Douglas McDonald Company’s balance sheet included the following shareholders’ equity accounts at December 31, 2020: ($ in millions)Paid-in capital: Common stock, 900 million shares at $1 par..................................$ 900 Paid-in capital—excess of par.............................................................15,800 Retained earnings....................................................................................14,888 Total shareholders’ equity..................................................................$31,588 On March 16, 2021, a 4% common stock dividend was declared and distributed. The market value of the common stock was $21 per share. Fractional share rights represented 2 million equivalent whole shares. Cash was paid in lieu of the fractional share rights. ...

Following is the shareholders’ equity section of Morgan Supplies on a day its common stock is...

Following is the shareholders’ equity section of Morgan Supplies on a day its common stock is trading at $77 per share. Common stock ($2 par value, 30,000 shares issued and outstanding) $ 60,000 Additional paid-in capital on common stock 1,200,000 Retained earnings 3,000,000 Required: a. Use the financial statement template below to show the financial statement effects of the following dividend events. (Assume that the events are independent.) (1) Cash dividend declaration and payment of $1 per share (2) Property...

Subjects