Answer:
1. assuming a small (10%) stock dividend -
Stock dividend Debit $ 30,000
Common stock Credit $ 1,000
Additional paid-in capital Credit $29,000
2. large (100%) stock dividend -
Stock dividend Debit $ 10,000
Common stock Credit $ 10,000
3. a 2-for-1 stock split -
No Journal Entry required.
Explanation:
Requirement 1
Explanation: Total paid up capital = 10,000 shares x $30 = $300,000
Common stock = 10,000 shares x $1 = $10,000
Additional paid in capital $(30 - 1) = $29
10,000 shares x $29 = $290,000
Therefore, stock dividend = $300,000 x 10% = $30,000
And for common stock = $10,000 x 10% = $1,000
Additional paid in capital = $290,000 x 10% = $29,000
Requirement 2 & 3.
2. Total paid up capital = 10,000 shares x $30 = $300,000
of them, common stock = 10,000 shares x $1 = $10,000
As there is a large stock dividend, the dividend will only from common stock par value. Therefore, the stock dividend will be = $10,000 x 100% = $10,000
3. As the stock does not provide any cash, instead only giving more stock, it will not require any journal entries. Stock may be changed, but cash dividend remains same.
