QUESTION 6

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Stock Dividends

Witt Corporation has 73,000 shares of $5 par value common stock outstanding. At year-end, the company declares a four percent stock dividend. The market price of the stock on the declaration date is $21 per share. Four weeks later, the company issues the shares of stock to stockholders. a. Prepare the journal entry for the declaration of the stock dividend. b. Prepare the journal entry for the issuance of the stock dividend. c. Assume that the company declared a 40 percent stock dividend rather than a four percent stock dividend. Prepare the journal entries for (1) the declaration of the stock dividend and (2) the issuance of the stock dividend.

General Journal
Ref.	Description	Debit	Credit
a.	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	$Answer	$Answer
	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	Paid-in-Capital in Excess of Par Value	Answer	Answer
	To record declaration of stock dividend.
b.	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	Issued common stock for stock dividend.
c. 1)	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	To record declaration of stock dividend.
c. 2)	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	AnswerStock DividendsStock Dividend DistributablePaid-in-Capital in Excess of Par ValueCommon Stock	Answer	Answer
	Issued common stock for stock dividend.