The stockholders' equity accounts of Lawrence Company have the following balances on December 31, 2010.

Question

Common stock, $10 par, 274,000 shares issued and outstanding $2,740,000

Paid-in capital in excess of par 1,200,000
Retained earnings 5,600,000

Shares of Lawrence Company stock are currently selling on the Midwest Stock Exchange at $39.

Prepare the appropriate journal entries for each of the following. (a) and (b) and provide answer for (c). (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

(a) A stock dividend of 5% is declared and issued.


Description/Account Debit Credit
Paid-in Capital in Excess of ParCashPaid-in Capital in Excess of Stated ValueDividends PayableRetained EarningsCommon StockCommon Stock Dividend Distributable
Retained EarningsCommon Stock Dividend DistributableCommon StockPaid-in Capital in Excess of ParPaid-in Capital in Excess of Stated ValueDividends PayableCash
Paid-in Capital in Excess of Stated ValuePaid-in Capital in Excess of ParCommon StockRetained EarningsDividends PayableCashCommon Stock Dividend Distributable
(To record declaration)
Dividends PayableCashRetained EarningsPaid-in Capital in Excess of ParPaid-in Capital in Excess of Stated ValueCommon StockCommon Stock Dividend Distributable
Dividends PayableCashPaid-in Capital in Excess of ParCommon StockRetained EarningsCommon Stock Dividend DistributablePaid-in Capital in Excess of Stated Value
(To record distribution of shares)

(b) A stock dividend of 100% is declared and issued.


Description/Account Debit Credit
Paid-in Capital in Excess of ParCommon Stock Dividend DistributableDividends PayableRetained EarningsPaid-in Capital in Excess of Stated ValueCommon StockCash
Common StockRetained EarningsDividends PayablePaid-in Capital in Excess of Stated ValueCashCommon Stock Dividend DistributablePaid-in Capital in Excess of Par
(To record declaration)
Retained EarningsPaid-in Capital in Excess of ParPaid-in Capital in Excess of Stated ValueCashDividends PayableCommon Stock Dividend DistributableCommon Stock
Common StockPaid-in Capital in Excess of Stated ValueCommon Stock Dividend DistributablePaid-in Capital in Excess of ParCashRetained EarningsDividends Payable
(To record distribution of shares)

(c) How much of a reduction in retained earnings results when a 2-for-1 stock split is declared and issued?

$

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