Answered

Westonci.ca is the premier destination for reliable answers to your questions, provided by a community of experts. Explore our Q&A platform to find reliable answers from a wide range of experts in different fields. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

Large Stock Dividend and Forward Stock Split Low Corporation has 50,000 shares of $40 par value common stock outstanding and retained earnings of $1,500,000. The company declares a 100 percent stock dividend. The market price at the declaration date is $40 per share. a. Prepare the journal entries for (1) the declaration of the dividend and (2) the issuance of the dividend.

Sagot :

Zviko

Answer:

Part 1

Debit : Dividends  $50,000

Credit : Shareholders for dividends $50,000

Part 2

Debit : Shareholders for dividends $50,000

Credit : Cash $50,000

Explanation:

When dividends are declared and not paid, raise a Liability - Shareholders for Dividends to depict the Company`s Present obligation to its shareholders.

When dividends are issued, derecognize the liability - Shareholders for Dividends and recognize a Cash outflow to depict the outflow of cash resources as a result of the distribution.

Dividends Calculation :

Dividends = 50,000 shares  x 100% = $50,000

We hope this information was helpful. Feel free to return anytime for more answers to your questions and concerns. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.