On January 1, Year 2, Zook Company had 26,000 shares of $1 par common stock outstanding....

On January 1, Year 2, Zook Company had 26,000 shares of $1 par common stock outstanding. During October, Year 2, the company’s board of directors declared and distributed a 1% common stock dividend when the market value of its common stock was $56 per share. In recording this transaction, what amount will be debited to Retained earnings in the journal entry to record the stock dividend?

Solutions

Expert Solution




Outstanding number of shares =	26,000	Shares
1% common stock dividend = 1% of 26,000 Shares =	260	Shares

Market price per shares =	$ 56	Per Shares
Par value of the shares =	$ 1	Per Shares


There is 260 shares can be distributed as stock dividend

Stock dividend will charged to retained earning on the basis of market value
It means par value and excess of par value both will be debited to retained earnings

Amount debited to retained earning = 260 Shares X $ 56 =	$ 14,560


Answer = Amount debited to stock dividend = $ 14,560

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Dunbar Company had 1,000,000 shares of $1 par value common stock outstanding at January 1, 2015....

Dunbar Company had 1,000,000 shares of $1 par value common stock outstanding at January 1, 2015. On July 1, 2015, the company issued 100,000 additional shares of common stock. In addition, at December 31, 2015, 90,000 shares were issuable upon exercise of executive stock options which require a $40 cash payment upon exercise. The average market price during 2015 was $50. Dunbar Company also has two convertible securities. There are 10,000 convertible bonds with a face amount of $1,000,...

On January 1, each company issued 26,000 shares of $0.10 par value common stock for $160,000....

On January 1, each company issued 26,000 shares of $0.10 par value common stock for $160,000. Both companies commenced operations on this date. On January 2, each company borrowed $400,000 by issuing a 20-year, 7% note that specified interest plus $20,000 principal is due September 30 each year, beginning on September 30, 2014. On January 3, each company purchased land and a building for $420,000 cash. Both managers allocated $70,000 to the land and $350,000 to the building. On January...

On January 1, Novak Corp. had 99,000 shares of no-par common stock issued and outstanding. The...

On January 1, Novak Corp. had 99,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following occurred. Apr. 1 Issued 25,500 additional shares of common stock for $17 per share. June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 Issued 3,000 additional shares of common stock for $19 per...

On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par...

On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par value of $3 per share. On March 31, Alpha Corporation declared a 10% stock dividend when the market value was $8 per share. Use this information to prepare the General Journal entry (without explanation) for March 31. If no entry is required then write "No Entry Required."

On January 1 Windsor, Inc. had 74,000 shares of no-par common stock issued and outstanding. The...

On January 1 Windsor, Inc. had 74,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following transactions occurred: Apr. 1 Issued 11,000 additional shares of common stock for $10 per share. June 15 Declared a cash dividend of $1.00 per share to stockholders of record on June 30. July 10 Paid the $1.00 cash dividend. Dec. 1 Issued 6,000 additional shares of common stock for $14...

On January 1, Blue Spruce Corp. had 63,300 shares of no-par common stock issued and outstanding....

On January 1, Blue Spruce Corp. had 63,300 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following transactions occurred. Apr. 1 Issued 19,800 additional shares of common stock for $13 per share. June 15 Declared a cash dividend of $1.65 per share to stockholders of record on June 30. July 10 Paid the $1.65 cash dividend. Dec. 1 Issued 8,800 additional shares of common stock for...

On January 1, Lorain Corporation had 2,000 shares of $5 par common stock authorized and outstanding....

On January 1, Lorain Corporation had 2,000 shares of $5 par common stock authorized and outstanding. These shares were originally issued at a price of $26 per share. In addition, 500 shares of $50 par preferred stock were outstanding. These were issued at a price of $75 per share. During the year, the following stock transactions occurred: 1. March 3: Lorain reacquired 100 shares of its own common stock at a cost of $24 per share. 2. April 27: It...

On January 1, Hamblin Corporation had 120,000 shares of $10 par value common stock outstanding. On...

On January 1, Hamblin Corporation had 120,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 per share on March 17. The entry to record the transaction of March 17 would include a Group of answer choices debit to Common Stock Dividends Distributable for $120,000. credit to Stock Dividends for $36,000. credit to Cash for $156,000. credit...

On January 1, 2017 Headland Industries had stock outstanding 9700 shares $970000 Common stock $10 par...

On January 1, 2017 Headland Industries had stock outstanding 9700 shares $970000 Common stock $10 par value, issued and outstanding 200000 shares 2000000 To acquire the net assets of three smaller companies, Headland authorized the issuance of an additional 157200 common shares. The aquisitions took place as shown below. Date of Aquisition. Shares Issued Company A April 1, 2017. 48000 Company B July 1, 2017. 78000 Company C October 1 2017. 31200 On May 14, 2017 Headland realized a $92400...

On January 1, 2020, a company had 700,000 shares of common stock outstanding. On March 1,...

On January 1, 2020, a company had 700,000 shares of common stock outstanding. On March 1, it issued a 3-for-1 stock split. On July 1 it Issued 50,000 shares. On September 1 it Issued a 20% stock dividend. Determine the weighted-average number of shares outstanding as of December 31, 2020.

Subjects