Question

The Metro Corporation's stockholders' equity accounts have the following balances as of January 1,2023:

Common stock, $10 par (60,000 shares issued and outstanding) $ 600,000
Paid-in capital in excess of par: common 1,500,000
Retained earnings 1,200,000
Total stockholders' equity $3,300,000
Metro engaged in the following dividend transactions during 2023:
March 1: Declared a 50% stock dividend on the common stock, distributable on April 10.
The market price per share for the common stock was $35 on March 1.
April 10: Distributed the stock dividend declared on March 1.
June 30: Declared a 10% stock dividend on the common stock, distributable on August 5.
The market price for the common stock was $38 per share on June 30.
August 5: Distributed the stock dividend declared on June 30.
December 1: A $.60 per share cash dividend was declared on the common stock, payable on January 20, 2024.
Required:
Prepare the entries to record the dividend transactions for 2023. Do not record the cash dividend payment in 2024.

Answer 1

To record the dividend transactions for 2023, journal entries need to be made for each event. A 50% stock dividend was declared in March and a 10% stock dividend was declared in June. The company also declared a cash dividend in December.

Step-by-step explanation:

The Metro Corporation engaged in several dividend transactions in 2023. To record these transactions, we need to make the appropriate journal entries. Here are the entries:

1. March 1: The company declared a 50% stock dividend on the common stock. To record this, we debit Stock Dividend Distributable for $300,000 and credit Common Stock Dividend Distributable for the same amount.
2. April 10: The stock dividend declared on March 1 is distributed. To record this, we debit Common Stock Dividend Distributable for $300,000 and credit Common Stock for the same amount.
3. June 30: The company declared a 10% stock dividend on the common stock. To record this, we debit Stock Dividend Distributable for $60,000 and credit Common Stock Dividend Distributable for the same amount.
4. August 5: The stock dividend declared on June 30 is distributed. To record this, we debit Common Stock Dividend Distributable for $60,000 and credit Common Stock for the same amount.
5. December 1: A cash dividend of $0.60 per share is declared on the common stock. To record this, we debit Retained Earnings for $36,000 (60,000 shares x $0.60) and credit Cash Dividends Payable for the same amount.