Brief Exercise 14-03 Langley Corporation has 50,000 shares of $10 par value common stock outstanding. It declares a 15% stock dividend on December 1 when the market price per share is $16. The dividend shares are issued on December 31. Prepare the entries for the declaration and issuance of the stock dividend

Langley Corporation

Journal Entries:

December 1:

Debit Retained Earnings $75,000

Credit Stock Dividend Payable $75,000

To record the declaration of 15% of 50,000 at par value.

December 31:

Debit Stock Dividend Payable $75,000

Credit Common Stock $75,000

To record the issuance of common stock for the stock dividend.

Explanation:

Data and Calculations:

Outstanding common stock = 50,000

Par value = $10

Market price = $16

December 1, Stock dividend declared = 7,500 (15% of 50,000) shares

December 31, Issuance of the stock dividend

New outstanding common stock shares = 57,500 (50,000 + 7,500)