Question

1 a. Declared a 50% stock dividend on 10,000 outstanding shares. The stock has a market value of $25 and a par value of $10. b. Issued the shares from la. 2 Issued 5,000 common shares for cash at their market price. The stock has a market value of $25 and a par value of $10. 3 Issued 5,000 common shares to the original incorporators for free. The stock has a market value of $25 and a par value of $10. 4 Issued 5,000 common shares for $70,000 of Land. The stock has a market value of $25 and a par value of $10. 5 a. Declared a 10% stock dividend on 50,000 outstanding shares. The stock has a market value of $25 and a par value of $10. b. Issued the shares from Sa. cs Scanned with CamScanner

Answer 1

Journal Entries:

1	a	Retained Earnings (10,000 x 50% x $10 par)	$50,000
		Common stock dividend distributable		$50,000
		[To record declaration of stock dividend]
	b	Common stock dividend distributable	$50,000
		Common stock		$50,000
		[To record issuance of common stock]
2		Cash (5,000 x $25)	$125,000
		Common stock (5,000 x $10 par)		$50,000
		Paid-in capital in excess of par-common stock		$75,000
		[To record issuance of common stock for cash]
3		Incorporation expenses (5,000 x $25)	$125,000
		Common stock (5,000 x $10 par)		$50,000
		Paid-in capital in excess of par-common stock		$75,000
		[To record common stock issued to incorporators]
4		Land (5,000 x $25)	$125,000
		Common stock (5,000 x $10 par)		$50,000
		Paid-in capital in excess of par-common stock		$75,000
5	a	Retained Earnings (50,000 x 10% x $25)	$125,000
		Common stock dividend distributable (50,000 x 10% x $10 par)		$50,000
		Paid-in capital in excess of par - common stock		$75,000
		[To record declaration of stock dividend]
	b	Common stock dividend distributable	$50,000
		Common stock		$50,000
		[To record issuance of common stock]

Explanations:

For 1, Stock dividend should be issued at par value because it's a large stock dividend

For 5, Stock dividend should be issued at market value because it's a small stock dividend