Chapter 11, Problem 11.8BP

(a)

To determine

Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.

Stock Dividends: It refers to the payment of dividends by a company to its existing shareholders, in the form of additional shares rather than cash. Stock dividends are paid, when there is an inadequate cash available in the company.

Stockholders’ equity: It refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To Journalize: the payment of cash dividends and stock dividends for Corporation L.

(b)

To determine

To post: the journal entries into stockholders’ equity accounts.

(c)

To determine

To Prepare: the stockholders’ equity section of balance sheet for Corporation L as of December 31, 2014.

(d)

To determine

To Calculate: the payout ratio for Corporation L.