Question

Entries for Stock Dividends

Madrid Corporation has 25,000 shares of $80 par common stock outstanding. On August 2, Madrid Corporation declared a 5% stock dividend to be issued October 8 to stockholders of record on September 15. The market price of the stock was $110 per share on August 2.

Journalize the entries required on August 2, September 15, and October 8. If an amount box does not require an entry, leave it blank. If no entry is required, select "No Entry Required" and leave the amount boxes blank.

Aug. 2
Sept. 15
Oct. 8

Answer 1

WORKING NOTES:
		CALCULATION OF TOTAL VALUE OF STOCK DIVIDEND IS PAID
		Numer of Common Shares Issued and outstanding = (A)	25,000	Shares
		Stock Dividend Declared % of total shares issued and outstanding (B)	5%
		Stock Dividend Declared Shares to be issued (C = AXB)	1,250	Shares
		Market Value of 1 Shares on date of declaration (D)	$                          110	Per Shares
		Par Value of the one shares ('E)	$                             80	Per Shares
		Addittional Paid in Captial (Market Value - Par Value) (F)	$                             30	Per Shares
		Total value of dividend = (CXD)	$                 1,37,500
		Par value of the Common Stock Dividend (CXE)	$                 1,00,000
		Value of Addittional paid in Capital (CXF)	$                    37,500
SOLUTION :
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	August.02	Stock Dividends	$1,37,500
		Stock Dividend Distributable		$1,00,000
		Addittional Paid in Capital - Common Stock		$37,500
		(To record the stock dividend declaration)
2	September.15	"No Entry Required"
3	October. 08	Stock Dividend Distributable	$1,00,000
		Common Stock		$1,00,000
		(To record the stock dividend distribtion)