Florence, Inc. has 30,000 shares of $15 par value common stock outstanding and retained earnings of $984,000. Tucson declares a cash dividend of $6.00 per share and, shortly thereafter, a 6% stock dividend. The market price of the stock is $66 per share at the declaration date of the stock dividend.
Required:
a. Prepare the general journal entries for (1) the declaration of the dividends and (2) the payment (or issuance) of the dividends.
b. Assume Tucson declares a 26% stock dividend rather than a 6% stock dividend. Give the general journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.

Question

Florence, Inc. has 30,000 shares of $15 par value common stock outstanding and retained earnings of $984,000. Tucson declares a cash dividend of $6.00 per share and, shortly thereafter, a 6% stock dividend. The market price of the stock is $66 per share at the declaration date of the stock dividend. 
Required:
a. Prepare the general journal entries for (1) the declaration of the dividends and (2) the payment (or issuance) of the dividends.
b. Assume Tucson declares a 26% stock dividend rather than a 6% stock dividend. Give the general journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.

Quizplus · Accepted Answer

The Answer of Florence, Inc. has 30,000 shares of $15 par value common stock outstanding and retained earnings of $984,000. Tucson declares a cash dividend of $6.00 per share and, shortly thereafter, a 6% stock dividend. The market price of the stock is $66 per share at the declaration date of the stock dividend. 
Required:
a. Prepare the general journal entries for (1) the declaration of the dividends and (2) the payment (or issuance) of the dividends.
b. Assume Tucson declares a 26% stock dividend rather than a 6% stock dividend. Give the general journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.