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Question 13BE

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Intermediate Accounting (Kieso)
Found in: Page 811

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Short Answer

Green Day Corporation has outstanding 400,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $65 per share. Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.

The total dividend distributed by Green Day Corporation is $200,000.

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Step by Step Solution

Meaning of Common Stock

The security that symbolizes possession in a company is known as common stock. Unusual shareholders do not accompany the board of administrators and do not participate in enterprise decision-making.

Preparing Journal Entries   

Date

Particular

Debit ($)

Credit ($)

Declaration Date

Retained Earnings A/c

1,300,000

Common Stock Dividend Distributable A/c

200,000

Paid-in Capital in excess of par common stock A/c

1,100,000

To record the payment of dividend

DistributionDate

Common Stock Dividend Distributable A/c

200,000

Common Stock A/c

200,000

To record the payment of dividend

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