Question

Green Day Corporation has outstanding 411,800 shares of $10 par value common stock. The corporation declares a 10% stock dividend when the fair value of the stock is $74 per share.

Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

a. Retained earning A/c Dr $3,047,320

To Paid-in capital in excess of par A/c $2635,520

To Common stock dividend distributable A/c $411,800

(Being the date of declaration is recorded)

It is computed below:

For retained earning

= 411,800 shares × $74 × 10%

= $3,047,320

For common stock, it is

= 411,800 shares × $10 × 10%

= $411,800

b. Common stock dividend distributable A/c Dr $411,800

To Common stock A/c $411,800

(Being the date of distribution is recorded)