Question

Prepare entries to record the following selected transactions completed during the current fiscal year:

Jan. 1	The board of directors declared a stock split which reduced the par of common shares from $100 to $20. This action increased the number of outstanding shares to 500,000.
10	Purchased 25,000 shares of own stock at $44, recording the treasury stock at cost.
March 1	Declared a dividend of $2 per share on the outstanding shares of common stock.
15	Paid the dividend declared on March 1
July 1	Declared a 1% stock dividend on common stock outstanding (the fair market value of the stock to be issued is $50).
July 15	Issued the certificates for the common stock dividend declared. Description Debit Credit 1/1 1/10

Answer 1

Journal Entries
Date	Account Tittle & Explanation	Debit	Credit
1-Jan	No Entry
10-Jan	Treasury Stock (25000X $44))	$1,100,000
	Cash		$1,100,000
	To Record Purchase Treasury Stock
1-Mar	Cash Dividend (500000shareX $2)	$1,000,000
	Cash Dividend Payable		$1,000,000
	To Record Dividend Declarred
15-Mar	Cash Dividend Payable (500000shareX $2)	$1,000,000
	Cash		$1,000,000
	To Record Dividend Paid
1-Jul	Stock Dividend (500000*$50X1%)	$250,000
	Stock Dividend Distributable (500000*1%*$20)		$100,000
	Excess of Par - Common Stock		$150,000
	TO Record Stock Dividend
15-Jul	Stock Dividend Distributable	$100,000
	Common Stock		$100,000
	To Record issue of stock agst stock dividend

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