Concept explainers
(a)
Stock Dividends: It refers to the payment of the dividend to its shareholders by the corporation in the form of shares rather than cash is referred as stock dividend.
To
(a)

Answer to Problem 12.10EX
Record the declaration and issuance of stock dividends.
Transaction Number | Account Titles and Explanation | Debit ($) | Credit ($) |
1 | Stock Dividends (2) | 1,980,000 | |
Common Stock Dividends (3) |
1,650,000 | ||
Paid-in Capital in excess of Par Value-Common stock (4) |
330,000 | ||
(To record the declaration of stock dividends) | |||
2 | Stock Dividends Distributable (3) | 1,650,000 | |
Common Stock | 1,650,000 | ||
(To record the distribution of stock dividends) |
Table (1)
Compute the number of stock dividends shares declared.
Compute the stock dividends amount payable to common stockholders.
Compute stock dividends distributable value.
Compute paid-in capital in excess of par value-common stock.
Explanation of Solution
Transaction 1: Declared 5% of stock dividends.
- Stock Dividends is a contra-stockholders’ equity account which decreases the stockholders’ equity amount. Therefore, debit Stock Dividends account with $1,980,000.
- Common Stock Dividends Distributable is a stockholders’ equity account and the amount has increased due to the declaration of stock dividends. Therefore, credit Common Stock Dividends Distributable account with $1,650,000.
- Paid-in Capital in Excess of Par Value is a stockholders’ equity account and the amount has increased due to increase in capital excess of common stock value. Therefore, credit Paid-in Capital in Excess of Par Value account with $330,000.
Transaction 2: Distribution of stock dividends declared.
- Common Stock Dividends Distributable is a stockholders’ equity account and the amount has decreased due to transfer of Common Stock Dividends Distributable amount to Common Stock account. Therefore, debit Common Stock Dividends Distributable account with $1,650,000.
- Common Stock is stockholders’ equity account and the amount has increased. Therefore, credit Common Stock account with $1,650,000.
(b)
(1) Total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity amount before the declaration of the stock dividends.
(b)

Explanation of Solution
(1)
Determine total paid-in capital amount before the declaration of the stock dividends.
Hence, the total paid-in capital amount before the declaration of the stock dividends is $42,000,000.
(2)
Determine total retained earnings amount before the declaration of the stock dividends.
It is given that HL Company’s retained earnings before the declaration of the stock dividends is $89,550,000.
Hence, the total retained earnings amount before the declaration of the stock dividends is $89,550,000.
(3)
Determine total stockholders’ equity amount before the declaration of the stock dividends.
Hence, the total stockholders’ equityamount before the declaration of the stock dividends is $131,550,000.
(c)
(1) Total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity amount after the declaration of the stock dividends.
(c)

Explanation of Solution
(1)
Determine total paid-in capital amount after the declaration of the stock dividends.
Hence, the total paid-in capital amount after the declaration of the stock dividends is $43,980,000.
(2)
Determine total retained earnings amount after the declaration of the stock dividends.
Hence, the total retained earnings amount after the declaration of the stock dividends is $87,570,000.
(3)
Determine total stockholders’ equity amount after the declaration of the stock dividends.
Hence, the total stockholders’ equityamount after the declaration of the stock dividends is $131,550,000.
Want to see more full solutions like this?
Chapter 12 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
- I want to correct answer general accounting questionarrow_forwardHere are comparative balance sheets for Concord Company. CONCORD COMPANY Comparative Balance Sheets December 31 Assets 2022 2021 Cash $81,760 $24,640 Accounts receivable 97,440 85,120 Inventories 190,400 213,920 Land 80,640 112,000 Equipment 291,200 224,000 Accumulated depreciation (73,920) (35,840) Total $667,520 $623,840 Liabilities and Stockholders' Equity Accounts payable $41,440 $52,640 Bonds payable 168,000 235,200 Common stock ($1 par) 241,920 194,880 Retained earnings 216,160 141,120 Total $667,520 $623,840 Additional information: 1. Net income for 2022 was $112,000. 2. Cash dividends of $36,960 were declared and paid. 3. Bonds payable amounting to $67,200 were redeemed for cash $67,200. 4. Common stock was issued for $47,040 cash. 5. Equipment that cost $56,000 and had a book value of $33,600 was sold for $40,320 during 2022; land was sold at cost.arrow_forwardSolve this Accounting problemarrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning





