Journalizing a large stock dividend Nelly, Inc. had 320,000 shares of $2 par value common stock issued and outstanding as of December 15, 2018. The company is authorized to issue 1,300,000 common shares. On December 15, 2018, Nelly declared a 40% stock dividend when the market value for Nelly’s common stock was $7 per share. The stock was issued on Dec. 30. Requirements Journalize the declaration and distribution of the stock dividend. How many shares of common stock are outstanding after the dividend?

Question

Journalizing a large stock dividend

Nelly, Inc. had 320,000 shares of $2 par value common stock issued and outstanding as of December 15, 2018. The company is authorized to issue 1,300,000 common shares. On December 15, 2018, Nelly declared a 40% stock dividend when the market value for Nelly’s common stock was $7 per share. The stock was issued on Dec. 30.

Requirements

  1. Journalize the declaration and distribution of the stock dividend.
  2. How many shares of common stock are outstanding after the dividend?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Jackson Health Foods has 8,000 shares of $2 par common stock outstanding, which were issued at $15 p...

A: Owners’ equity: The claims of owners on a company’s resources, after the liabilities are paid off, a...

Q: On July 1, year 2, a company decided to adopt IFRS. The company’s first IFRS reporting period is as ...

A: IFRS:  International Financial Reporting Standard is abbreviated as IFRS. The IFRS is set up to brin...

Q: A company has included in its consolidated financial statements this year a subsidiary acquired seve...

A: Change in reporting entity:It refers to a change when two (or) more entities comprise together into ...

Q: The Commonwealth of Virginia filed suit in October 2014, against Northern Timber Corporation seeking...

A: 1.Prepare journal entry to record treasury stock:

Q: Stone Co. began operations in 2016 and reported $225,000 in income before income taxes for the year....

A: Click to see the answer

Q: Life-cycle costing. Maximum Metal Recycling and Salvage receives the opportunity to salvage scrap me...

A: 1.Calculate total project life cycle cost.

Q: Kap Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciat...

A: Sum of years depreciation:It is one of the depreciation methods which is based on the assumption tha...

Q: Southern Atlantic Distributors began operations in January 2016 and purchased a delivery truck for $...

A: 1. 

Q: In 2015, S began selling S Company gift cards. During 2015, S sold $4,600,000 of these gift cards. D...

A: A journal entry is prepared by the company to record the non-economic & economic transactions of...

Q: Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax pu...

A: 1. Prepare journal entry to record the change in value of inventory value.

Q: What are interim reports? Why are balance sheets often not provided with interim data?

A: Click to see the answer

Q: Journalizing issuance of stock for assets other than cash Cedar Corporation issued 36,000 shares of ...

A: Valuation principle:  As per the principle, the  stock issued in exchange of assets other than cash,...

Q: If it is discovered that an extraordinary repair in the previous year was incorrectly debited to rep...

A: Click to see the answer

Q: In previous years, Cox Transport reacquired 2 million treasury shares at $20 per share and, later, 1...

A: Click to see the answer

Q: What are the major advantages of notes to the financialstatements? What types of items are usually r...

A: Notes to financial statements can be the information which is left out from the balance sheet and in...

Q: . The board of directors of Tirico Corp. declared cash dividends of $260,000 during the current year...

A: Cash dividend: The amount of cash provided by a company out of its distributable profits as a return...

Q: The accounting clerk for the Ram System company receives source documents such as purchase orders, s...

A: Financial Reporting System: The financial reporting system (FRS) overview the financial resources of...

Q: Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement o...

A: Click to see the answer

Q: In 2016, Adonis Industries changed its method of valuing inventory from the average cost method to t...

A: Calculate the changes in inventory value.

Q: Equipment upgrade versus replacement. (A. Spero, adapted) The TechGuide Company produces and sells 7...

A: We will answer the first three subparts since the exact three were not specified. Please submit a ne...

Q: American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton ...

A: 1.Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2...

Q: The prescribed accounting treatment for stock dividends implicitly assumes that shareholders are foo...

A: Stock Dividends: It refers to the payment of dividends by a company to its existing shareholders, in...

Q: Help with the income statement

A: Income statement: The financial statement which reports revenues and expenses from business operatio...

Q: During 2016, WMC Corporation discovered that its ending inventories reported on its financial statem...

A: 1. 

Q: White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat ...

A: Process costs It is a method of cost accounting, which is used where the production is continuous, a...

Q: A close friend of yours, who is a history major and who has not had any college courses or any exper...

A: Click to see the answer

Q: Discuss and illustrate how a correction of an error in previously issued financial statements should...

A: Click to see the answer

Q: Value-added, non-value-added costs. The Magill Repair Shop repairs and services machine tools. A sum...

A: 1.Classification of each cost as value added and non- value added costs are as below:

Q: Adams Moving and Storage, a family-owned corporation, declared a property dividend of 1,000 shares o...

A: Prepare journal entry to record the gain (loss) on investment at the date of declaration of property...

Q: Each of the following items must be considered in preparing a statement of cash flows for Blackwell ...

A: Click to see the answer

Q: Analysis of growth, price-recovery, and productivity components (continuation of 12-19). An analysis...

A: Cost Leadership Strategy: This is a strategy in which a firm distinguishes it by lowering the market...

Q: On December 12, 2016, an investment costing $80,000 was sold for $100,000. The total of the sale pro...

A: The error got rectified by passing the rectification entry in which cash is debited on account of sa...

Q: What are “liability gains and losses,” and how are theyaccounted for?

A: Liability gains and losses arise from the unexpected increase or decrease in the value of projected ...

Q: Determining the present value of bonds payable and journalizing using the effective-interest amortiz...

A: The presnt value of bond is $ 311580the compnay received $ 311580 as cash.

Q: Broussard Company reported net income of $3.5 million in 2020. Depreciation for the year was $520,00...

A: A Cash flow statement is a financial statement that provides the summarised information regarding ca...

Q: The Peridot Company purchased machinery on January 2, 2014, for $800,000. A five-year life was estim...

A: Accounting ChangesAccounting changes are the alterations made to the accounting methods, accounting ...

Q: Companies are required to transfer “other comprehensive income” each period to shareholders’ equity....

A: Comprehensive income:Comprehensive income represents the amount of net income plus other comprehensi...

Q: Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufac...

A: Total estimated overheads.

Q: W2 Assignment 2PR.04-01BPR.04-02BPR.04-05BHide or show questionsProgress:1/3 itemseBookCalculatorPri...

A: 1.

Q: EMC Corporation manufactures large-scale, high-performance computer systems. In a recent annual repo...

A: Click to see the answer

Q: A company’s own stock that it has issued and repurchased is called outstanding stock. dividend stoc...

A: The correct answer is Option (d).

Q: What are some of the arguments in favor of using the indirect (reconciliation) method as opposed to ...

A: Statement of cash flows: The statement of cash flows is a statement which includes all transactions ...

Q: Balanced scorecard, environmental, and social performance. Gardini Chocolates makes custom-labeled, ...

A: Requirement 1:Identify whether the strategies in 2017 are implemented successfully.No, the strategy ...

Q: Access the FASB Accounting Standards Codification at the FASB website ( asc.fasb.org ). Determine th...

A: 1.