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# prob 10-47 - horngren - intro to financial accounting 9th edition

## 2) The journal entry for dividends payable would be reported as:

3) Here the stock dividend issued is small (less than 20-25%) . If the stock dividend is small, the amount transferred should be the total market value of the shares issued, with the par value of the stock transferred to the Common stock account and the excess transferred to the Capital-inexcess of par value account. Stock dividend issued = 5% (400,000) = 20,000 shares Therefore, the additional number of shares issued with the stock dividen are 20,000 Total number of new shares = 400,000 + 20,000 = 420,000 shares Amount of dividends that should be transferred from retained earnings to Common stock is Stock dividend = Additional shares * Market value per share = 20,000 * \$5 = \$100,000 Amount of dividends that should be transferred from retained earnings to CApital-in-excess of par value account is Stock dividend = 20,000 * \$45 = \$900,000 New Common stock account = \$2,000,000 + \$100,000 = \$2,100,000 New Capital-in-excess of par value account = \$8,000,000 + \$900,000 = \$8,900,000

## 4) The journal entries that are to be made by the investor are:

5) The journal entry after the sale of shares would be reported as: