Chapter 13: Q17RQ (page 707)
What are some reasons corporations issue stock dividends?
A corporation may issue a stock dividend instead of paying a cash dividend to minimize cash distribution, decrease market price of each share, increase no of shares of stock outstanding.
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Eates Corp. issued 8,000 shares of no-par common stock for $13 per share.
Requirements
2. Which type of stock results in more total paid-in capital?
Journalizing issuance of stock
Steller Systems completed the following stock issuance transactions:
May 19 Issued 1,700 shares of \(3 par value common stock for cash of \)10.50 per share.
Jun. 3 Issued 300 shares of \(9, no-par preferred stock for \)15,000 cash.
11 Received equipment with a market value of \(68,000 in exchange for 5,000 shares of the \)3 par value common stock.
Requirements
2. How much paid-in capital did these transactions generate for Steller Systems?
Question: Accounting for cash dividends
Java Company earned net income of \(85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, \)120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.
Requirements
2. Journalize for Java the entry paying the cash dividends on January 4, 2019.
Eates Corp. issued 8,000 shares of no-par common stock for \(13 per share.
Requirements
1. Record issuance of the stock if the stock:
a. is true no-par stock.
b. has stated value of \)3 per share.
Question: Journalizing a small stock dividend
Element Water Sports has 13,000 shares of \(1 par value common stock outstanding.
Element distributes a 5% stock dividend when the market value of its stock is \)15 per share.
Requirements
3. What is the overall effect on total stockholders’ equity?
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