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Bradford Company reported stockholders' equity on December 31 of the prior year as follows: corrimon stock 510 par value 2
Bradford Company reported stockholders' equity on December 31 of the prior year as follows: corrimon stock 510 par value 2.000.000 shares authorized 800.000 shares issue 58.000.000 Pald-in capital in excess of par. common stock 3,000,000 Retained earnings 7.000.000 Baguired:Prepare the journal entries for the following selected transactions that occured during the current year: A February 19: The board of directors declared a su stock dividend to stockholders of record on March 1. The stock was selling for 512 per share ) March 9. Distributed the stock dividend c) Mayt:Awath dividend et ses per share was declared by the board of directors to stockholders of record on May 20, payable June 1 Djuneti Pad the cash and 1) August 20: Declared and distributed for stock split for the toolbar ALT F10 OPCOE ALTERN+F10 M)
Expert Solution
The following will be journal entries:
| Date | Accounts | debit | Credit |
| February 15 | Retained earnings | 480,000 | |
| common stock dividend distributable | 400,000 | ||
| Additional paid in capital - common stock | 80,000 | ||
| (see note for expalanation) | |||
| March 9 | Common stock dividend distributable | 400,000 | |
| Common stock | 400,000 | ||
| May 1 | Retained earnings | 420,000 | |
| Cash dividend distributable | 420,000 | ||
| (amount = (800,000+40,000 stock dividend=>840,000 shares *$0.50 per share) | |||
| June 1 | Cash dividend distributable | 420,000 | |
| Cash | 420,000 | ||
| August 20 | No entry needed for stock split |
Note:
Number of shares issued as stock dividend = 800,000 shares issued and outstanding* 5% stock dividend
=>40,000 shares.
Amount to be debited to retained earnings = 40,000 shares* $12 per share market value
=>$480,000.
Amount to be credited to common stock dividend distributable = 40,000 shares * $10 par value =>$400,000.
amount to be credited to addtional paid in capital = 40,000 shares* $2 per share premium=>$80,000.
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