Question

Hancock Company has 900,000 shares authorized and 350,000 shares issued and outstanding of its $2 par value common stock. The stock is currently selling for $20 per share. If Hancock Company declared and distributed a 30% stock dividend, what journal entry would the company make

Answer 1

Dr Retained Earnings 210,000

Cr Common Stock 210,000

Step-by-step explanation:

Based on the information given we were told that the company has 350,000 shares issued with an outstanding of its $2 par value of common stock which means that if Company declared and as well distributed a 30% stock dividend, the transaction will be recorded as

Dr Retained Earnings 210,000

Cr Common Stock 210,000

(350,000 Shares *$2 par value common stock)

=$700,000*30%

=$210,000