Journal entries for dividends and stock splits. The shareholders’ equity section of the balance sheet of Baker Corporation on January 1 of the current year appears below:
|
Shareholders’ Equity Common Stock, $10 par value, 25,000 shares issued and outstanding |
$250,000 |
|
Additional Paid In Capital |
50,000 |
|
Retained Earnings |
150,000 |
|
Total |
$450,000 |
Prepare journal entries for each of the following transactions of Baker Corporation for the current year. Ignore income taxes.
a. March 31: The board of directors declares a cash dividend of $0.50 per share. The firm will pay the dividend on April 15.
b. April 15: The firm pays the dividend declared on March 31.
c. June 30: The board of directors declares and distributes a 10% stock dividend. The market price per share on this date is $15.
d. December 31: The board of directors declares a two for one stock split and changes the par value of the common shares from $10 to $5.