Answered

Find the best solutions to your questions at Westonci.ca, the premier Q&A platform with a community of knowledgeable experts. Join our platform to connect with experts ready to provide precise answers to your questions in different areas. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

Beacon Corporation issued a 7 percent stock dividend on 22,500 shares of its $9 par common stock. At the time of the dividend, the market value of the stock was $28 per share. Required Compute the amount of the stock dividend. Show the effects of the stock dividend on the financial statements using a horizontal statements model. Prepare the journal entry to record the stock dividend.

Sagot :

anthougo

1. The amount of the stock dividend is $44,100 (1,575 x $28) because it is a small stock dividend, that is, less than 25%.  A small stock dividend is recorded at the market price instead of the par value.

2. The effects of the stock dividend on the financial statements are as follows:

Balance Sheet                          Retained Earnings   Statement of Cash Flows

Assets = Liabilities + Equity        

Assets = $44,100 + ($44,100)          ($44,100)            None

Data and Analysis:

Common stock at $9 par value

Stock dividend shares = 1,575 (22,500 x 7%)

Par Value of stock dividend = $14,175 (1,575 x $9)

Additional Paid-in Capital = $29,925 (1,575 x $19

Market value of the stock per share = $28

Retained Earnings $44,100 Additional Paid-in Capital $29,925 Common Stock $14,175

Stock Dividend $44,100 Stock Dividend Distributable $44,100

Thus, the effects of the issuance of the 7% stock dividend are the creation of a liability of $44,100 and a reduction of the Retained Earnings, which are transferred to the Common Stock and Additional Paid-in Capital.

Learn more: https://brainly.com/question/24334747 and https://brainly.com/question/24334747

We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.