Page 540 - Accounting Principles (A Business Perspective)

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(a) Common stock.
(b)Preferred stock.
(c) In excess of par value or stated value (common and preferred).

(d)Stock dividends.
(e) Treasury stock transactions.
(f) Donations.
• Cash dividend of 3 per cent on USD 100,000 of outstanding common stock: declared on July 1 and paid on
September 15.
July 1 Retained earnings (-SE) 3,000
Dividends payable (+L) 3,000

Sept. 15 Dividends payable (-L) 3,000
Cash (-A) 3,000
Ten per cent stock dividend on 10,000 shares of common stock outstanding; par value, USD 100; market value
at declaration, USD 125 per share (declared on January 1 and paid on February 1).
Jan. 1 Retained earnings (1,000 shares x 125,000
$125) (-SE)
Stock dividends distributable –
Common 100,000
(1,000 shares x $100) (+SE)
Paid-in Capital – Stock dividends
(1,000 shares x $25) (+SE) 25,000
Feb. 1 Stock dividend distributable – 100,000
Common (-SE)
Common stock (+SE) 100,000
• Thirty per cent stock dividend on 10,000 shares of common stock outstanding: declared on January 1 and
payable on February 1; par value, USD 100.
Jan. 1 Retained earnings (3,000 shares x 300,000
$100) (-SE)
Stock dividend distributable – 300,000
Common (+SE)
Feb. 1 Stock dividend distributable – 300,000
Common (+SE)
Common stock (-SE) 300,000
• Stock split: 1,000 shares of USD 50 par value common stock replaced by 2,000 shares of USD 25 par value
common stock.
Common stock - $50 par 50,000
value (-SE)
Common stock - $25 par 50,000
value (+SE)
• Retained earnings appropriation: USD 75,000 appropriated for plant expansion.
Retained earnings (-SE) 75,000
Retained earnings appropriated for plant 75,000
expansion (+SE)
• Treasury stock transactions: 100 shares of common stock were reacquired at USD 100 each and reissued for
USD 105 each.
Treasury stock – Common (100 shares x $100) 10,000
Cash 10,000
Cash (100 shares x $105) 10,500
Treasury stock – Common (100 shares x $100) 10,000
Paid-in Capital – Common treasury stock
transactions 500
(100 shares x $5)

Accounting Principles: A Business Perspective 541 A Global Text