Question

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Exercise 15-15

The following data were taken from the balance sheet accounts of Shamrock Corporation on December 31, 2016.

Current assets		$554,000
Debt investments		596,000
Common stock (par value $10)		455,000
Paid-in capital in excess of par		148,000
Retained earnings		800,000

Prepare the required journal entries for the following unrelated items. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)		A 4% stock dividend is (1) declared and (2) distributed at a time when the market price per share is $37.
(b)		The par value of the common stock is reduced to $2 with a 5-for-1 stock split.
(c)		A dividend is declared January 5, 2017, and paid January 25, 2017, in bonds held as an investment. The bonds have a book value of $105,000 and a fair value of $133,000.

No.	Date	Account Titles and Explanation	Debit	Credit
(a) (1)
(a) (2)
(b)
(c)	Jan. 5, 2017Jan. 25, 2017
		(To record change in value of bonds)
		(To record the declaration of dividends)
	Jan. 5, 2017Jan. 25, 2017

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Answer 1

Date	Accounts title	Debit	Credit	Working, if any
a1	Stock Dividends	$67,340		[45500 shares x 4% x $37]
	Stock Dividend distributable		$18,200	[45500 shares x 4% x $10 par]
	Paid in Capital in excess of Par		$49,140	[45500 shares x 4% x $27]
	(Dividend declared)
a2	Stock Dividend distributable	$18,200
	Common Stock		$18,200
	(Dividend distributed)
b	NO ENTRY required for stock split
c. Jan 5 2017	Investments (Bonds)/Debt Investments	$28,000		[$133000 - 105000]
	Gain on Appreciation of Investments (Bonds)		$28,000
	(to record change in value)
	Retained Earnings	$133,000
	Property Dividends Payable		$133,000
	(to record declaration)
Jan-25	Property Dividends Payable	$133,000
	Investments (Bonds)/Debt Investments		$133,000
	(to record payment)