The stockholders’ equity of TVX Company at the beginning of the day on February 5 follows. Common stock—$20 par value, 150,000 shares authorized, 64,000 shares issued and outstanding $ 1,280,000 Paid-in capital in excess of par value, common stock 424,000 Retained earnings 548,000 Total stockholders’ equity $ 2,252,000 On February 5, the directors declare a 2% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $36 per share on February 5 before the stock dividend. 1. Prepare entries to record both the dividend declaration and its distribution.

Feb 05

Dr Retained earnings $46,080

Cr Common stock dividend distributable $25,600

Cr Paid-in capital in excess of par value, Common stock $20,480

Journal entries Feb 28

Dr Common stock dividend

distributable$25,600

Cr Common stock, $20 par value $25,600

Explanation:

TVX Company

Journal entries

Feb 05

Dr Retained earnings $46,080

Cr Common stock dividend distributable $25,600

Cr Paid-in capital in excess of par value, Common stock $20,480

Journal entries Feb 28

Dr Common stock dividend

distributable$25,600

Cr Common stock, $20 par value $25,600

Feb. 5

Shares to be issued: 64,000 shares × 2% = 1,280 shares

Retained earnings: (1,280 shares × $36) = $46,080

Common stock dividend distributable: 1,280 shares × $20 per share = $25,600

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