Chapter 10, Problem 38BE

Accounting for cash and stock dividends (Learning Objectives 4 & 5) 10-15 min.

Akaman Auto, Inc., is authorized to issue 600,000 shares of $10 par common stock. The company issued 70,000 shares at $12 per share, and all 70,000 shares are outstanding. When the market price of common stock was $22 per share, Akaman Auto, Inc., declared and distributed a 10 percent stock dividend. Later, Akaman Auto, Inc., declared and paid a $0.45-per-share cash dividend.

Requirements

1. 1. Journalize the declaration and distribution of the stock dividend.
2. 2. Journalize the declaration and the payment of the cash dividend.