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Question 14BE

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Intermediate Accounting (Kieso)
Found in: Page 811

Short Answer

Use the information from BE15-13, but assume Green Day Corporation declared a 100% stock dividend rather than a 5% stock dividend. Prepare the journal entries for both the date of declaration and the date of distribution.

The dividend distributed by Green Day Corporation is $4,000,000.

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Step by Step Solution

Meaning of Dividend Declaration:

The term dividend declaration refers to the process of proposing the news to share the part of profit among the outstanding shareholders. A company records it as a liability because it owes the business to pay the declared amount of dividend.

Preparing Journal Entries  

Declaration date

Date

Particular

Debit ($)

Credit $)

Retained Earnings A/c

4,000,000

Common stock Dividend

Distributable A/c

4,000,000

To record the payment of dividend

Distribution Date

Common Stock Dividend Distributable A/c.

4,000,000

Common Stock A/c.

4,000,000

To record the payment of dividend

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