Parkersburg, Inc. has 50,000 shares of $20 par value common stock outstanding and retained earnings of $840,000. Parkersburg declares a cash dividend of $6.00 per share and, shortly thereafter, a 5% stock dividend. The market price of the stock is $36 per share at the declaration date of the stock dividend.
Required:
a. Give the general journal entries for (1) the declaration of the dividends and (2) the payment (or issuance) of the dividends.
b. Assume Parkersburg declares a 30% stock dividend rather than a 5% stock dividend. Give the general journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.

Question

Parkersburg, Inc. has 50,000 shares of $20 par value common stock outstanding and retained earnings of $840,000. Parkersburg declares a cash dividend of $6.00 per share and, shortly thereafter, a 5% stock dividend. The market price of the stock is $36 per share at the declaration date of the stock dividend. 
Required:
a. Give the general journal entries for (1) the declaration of the dividends and (2) the payment (or issuance) of the dividends.
b. Assume Parkersburg declares a 30% stock dividend rather than a 5% 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 Parkersburg, Inc. has 50,000 shares of $20 par value common stock outstanding and retained earnings of $840,000. Parkersburg declares a cash dividend of $6.00 per share and, shortly thereafter, a 5% stock dividend. The market price of the stock is $36 per share at the declaration date of the stock dividend. 
Required:
a. Give the general journal entries for (1) the declaration of the dividends and (2) the payment (or issuance) of the dividends.
b. Assume Parkersburg declares a 30% stock dividend rather than a 5% stock dividend. Give the general journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.