Entries for Stock Dividends

Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Lifes balance sheet: Common stock (390,000 shares authorized ; 8,000 shares issued), $25 par, $200,000; Paid-In Capital in excess of par common stock, $24,000; and Retained earnings, $2,000,000. The board of directors declared a 2% stock dividend when the market price of the stock was $31 a share. Healthy Life reported no income or loss for the current year.

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Question Content Area

a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.

	CashNo Entry RequiredPaid-In Capital in Excess of Par-Common StockStock Dividends DistributableStock Dividends
	CashNo Entry RequiredStock Dividends DistributableStock DividendsTreasury Stock
	CashCommon StockNo Entry RequiredPaid-In Capital in Excess of Par-Common StockStock Dividends

Question Content Area

a2. Journalize the entry to record the issuance of the stock certificates.

	Common StockNo Entry RequiredPaid-In Capital in Excess of Par-Common StockStock DividendsStock Dividends Distributable
	Common StockNo Entry RequiredPaid-In Capital in Excess of Par-Common StockStock Dividends DistributableStock Dividends

Question Content Area

b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital
Total retained earnings
Total stockholders' equity

c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital
Total retained earnings
Total stockholders' equity