Exercise 153Chetola Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a 15% stock dividend on June 1 when the market price per share was $13. The shares were issued on June 30.Prepare the necessary entries for the declaration and payment of the stock dividend.

Answer and Explanation:

The journal entries are shown below:

On June 1

Stock dividend (120000 × 15% × $13) $234,000

   To Common Stock dividend distributable  (120000 × 15% × 5)  $90,000

    To Paid in capital in excess of par-Common Stock $144,000

(being stock dividend declared is recorded)  

On June 30

Common Stock dividend distributable $90,000

          To Common Stock $90,000

(Being the  payment of stock dividend is recorded)