# Nutritious Pet Food Company’s board of directors declares a large stock dividend (50%) on June 30 when the stock’s market value per share is $30. At that time, there are 10,000 shares of$1 par value common stock outstanding (none held in treasury). What is the journal entry to record the declaration of the dividend?

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 14, Problem 12EB
Textbook Problem
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## Nutritious Pet Food Company’s board of directors declares a large stock dividend (50%) on June 30 when the stock’s market value per share is $30. At that time, there are 10,000 shares of$1 par value common stock outstanding (none held in treasury). What is the journal entry to record the declaration of the dividend?

To determine

To journalize:

The transactions relating to declaration of dividend.

Introduction:

Profits of the company are distributed as dividends to the stockholders of the company. Dividends can be distributed in the form of cash, stock, or property.

### Explanation of Solution

Record declaration of stock dividend:

 Date Account Debit($) Credit($) June 30 Retained earnings 5,000 Common stock dividend distributable 5,0001 (To record declaration of 50% stock dividend)

Table (1)

• Retained earnings is an equity account and it is decreased by $5,000. Therefore, retained earning is debited with$5,000.
• Common stock dividend distributable is a liability account and it is increased by $5,000. Therefore, common stock dividend payable account is credited with$5,000...

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