Question

Adams Moving and Storage, a family-owned corporation, declared a property dividend of 1,000 shares of GE common stock that Adams had purchased in February for $37,000 as an investment. GE’s shares had a market value of $35 per share on the declaration date. Prepare the journal entries to record the property dividend on the declaration and payment dates.

Answer 1

General Journal Debit Credit

1. Loss on investment $2,000

[$37,000 - (1000 * $35)]

Investment in GE stock $1,600

2. Retained earnings $35,000

(1000 * $35)

Property dividends payable $35,000

3. Property dividends payable $35,000

Investment in GE stock $35,000