Answered: Stock Dividends Witt Corporation has…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 3RE

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Question

Stock Dividends

Witt Corporation has 72,000 shares of $5 par value common stock outstanding. At year-end, the company declares a four percent stock dividend. The market price of the stock on the declaration date is $21 per share. Four weeks later, the company issues the shares of stock to stockholders.

a. Prepare the journal entry for the declaration of the stock dividend.
b. Prepare the journal entry for the issuance of the stock dividend.
c. Assume that the company declared a 40 percent stock dividend rather than a four percent stock dividend. Prepare the journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.

General Journal
Ref.	Description	Debit	Credit
a.	Answer	Answer	Answer
	Answer	Answer	Answer
	Paid-in-Capital in Excess of Par Value	Answer	Answer
	To record declaration of stock dividend.
b.	Answer	Answer	Answer
	Answer	Answer	Answer
	Issued common stock for stock dividend.
c. 1)	Answer	Answer	Answer
	Answer	Answer	Answer
	To record declaration of stock dividend.
c. 2)	Answer	Answer	Answer
	Answer	Answer	Answer
	Issued common stock for stock dividend.