Journal entry dec 20 stock dividend payable

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Journal entry:Dec. 20Stock Dividend Payable – PreferenceP 15,000Stock Dividend Payable - Ordinary74,000Share Capital - PreferenceP 15,000Share Capital - Ordinary74,000Illustrative problem – Large Stock DividendPrepare the journal entries for the following transaction.December, 20141 The board of directors of Tomboy Corporation find it hard to declare cash dividends so that they instead declared a20% stock dividend of the same kind for both the preferred (P100 par ) and common stocks (P100 par) forstockholders of record as of December 5, 2014 to be distributed on December 20, 2014. The market price of thestocks are P120 for common and P115 for preferred. The outstanding shares are 7,400 common shares and 1,500preferred shares.
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Partnership and Corporation – Illustrative Approach22120The stock dividend is issued to the stockholders of record.SolutionJournal entry:Dec. 1Retained EarningsP 178,000Stock Dividend Payable - PreferenceP 30,000Stock Dividend Payable - Ordinary148,000To record the declaration of 20% stock dividend.CommonPreferredTotalOutstanding Shares7,400 shares1,500 sharesRate of dividend20%20%Stock dividend1,480 shares300 shares@ P100 par valueP148,000P30,000P178,000Journal entry:Dec. 20Stock Dividend Payable - PreferenceP 30,000Stock Dividend Payable - Ordinary148,000Share Capital - PreferenceP 30,000Share Capital - Ordinary148,000To record the distribution of stock dividend to stockholders.Property DividendsProperty dividends are dividends in kind. The dividends are distributed in the form of non-cash assets of the corporation.Dividends payable in non-cash assets should be charged to retained earnings at cost or book value of the non-cashassetdistributed. (Do not use fair market value even if the information is available).Illustrative problemRecord the following transaction:2014December1 The board of directors of Corporation find it hard to declare cash dividends so that they instead declared aproperty dividendfor common stocks (P100 par), for stockholders of record of December 15, 2014, to bedistributed on December 20, 2014. The board have decided to give one (1) share of the company's TradingSecurityorInvestment in Stockin San Miguel Corporation’s (SMC) stocks held as investment, for every 10shares of common stock outstanding. The company owns 200 shares of SMC's stock that was bought 2 years agofor P100 per share. The current market price of the SMC's stocks is P120 per share. The outstanding shares as ofthis date is 1,000 common stock @ P100 par value.20The property dividend in the form of SMC’s stock is issued to the stockholders of record.Solution2014December1Retained EarningsP 10,000Property Dividend PayableP 10,000To record the declaration of dividend in property .1,000 outstanding shares/ 10 = 100 shares of SMC.Cost - 100 SMC shares x P 100 = P10,00020Property Dividend PayableP10,000Trading Security – SMCP 10,000
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Partnership and Corporation – Illustrative Approach222To record the payment of dividend in the form of SMC shares.
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  • Corporation, Limited partnership, Types of business entity, Managing Partner

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