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Horngren'S Financial And Managerial Accounting
Found in: Page 709

Short Answer

Question: Journalizing a small stock dividend

Element Water Sports has 13,000 shares of $1 par value common stock outstanding.

Element distributes a 5% stock dividend when the market value of its stock is $15 per share.


1. Journalize Element’s declaration of the stock dividend on August 15 and distribution on August 31.


August15- stock dividend will be debited by $9,750, common stock dividend distribution is credited by $650 and Paid- in capital will be credited by $9,100.

August 31- Common Stock Dividend Distributable will be debited by $650 and Common Stock—$1 Par Value will be credited by $650.

See the step by step solution

Step by Step Solution

Step 1: Calculation of stock dividend

Step 2: Journal entry of stock dividend





August 15

Stock dividend (650*$15)


Common stock Dividend distribution (650* $1)


Paid- in capital (650* $14)


To record dividend declared

August 31

Common Stock Dividend Distributable


Common Stock—$1 Par Value


To record dividend distributed

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