Cash and Stock Dividends

Lester Corporation has 30,000 shares of $1 par value common stock outstanding. The company has $250,000 of retained earnings. At year-end, the company declares a cash dividend of $3.00 per share and a five percent stock dividend. The market price of the stock at the declaration date is $40 per share. Three weeks later, the company pays the dividends.

Cash and Stock Dividends Lester Corporation has 30,000 shares of $1 par value common stock outstanding. The company has $250,000 of retained earnings. At year-end, the company declares a cash dividend of $3.00 per share and a five percent stock dividend. The market price of the stock at the declaration date is $40 per share. Three weeks later, the company pays the dividends. a. Prepare the journal entry for the declaration of the cash dividend. b. Prepare the journal entry for the declaration of the stock dividend. c. Prepare the journal entry for the payment of the cash dividend. d. Prepare the journal entry for the payment of the stock dividend. General Journal Ref. Description Debit Credit a. Cash dividends 0 x Dividends payable 0 0 x To record declaration of cash dividend. Stock dividends 0 x ov Stock dividend distributable 0 0 X Paid-in capital in excess of par value 0 > To record declaration of stock dividend. Dividends payable 0 x 0 Cash OV Paid cash dividend. d. Stock dividend distributable 0 x OV Common stock O X Issued stock for stock dividend Check