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Warrior Corp
Warrior Corp. has 26,000 common shares outstanding. Warrior distributes a 10 percent stock dividend when the market value of its shares is $24.00 per share.
1. Journalize Warrior?'s declaration of the stock dividend on July 31?, 2020?, and the distribution of the stock dividend on August ?30, 2020. Explanations are not required.
2. What is the overall effect of the stock dividend on Warrior?'s total? assets? On total? shareholders' equity?
Expert Solution
1)
| Journal Entries: | |||
| Date | Account Titles and Explanation | Debit | Credit |
| July-31 | Retained Earnings | 62400 | |
| Common Stock Dividend Distributable [26,000 * 10% * $24.00] | 62400 | ||
| [To record declaration of stock dividends] | |||
| August-30 | Common Stock Dividend Distributable | 62400 | |
| Common Stock | 62400 | ||
| [To record distribution of stock dividends] | |||
2) The stock dividends have no effect on total assets. The stock dividends have no effect on stockholders' equity.
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