On October 10, the Board of Directors of Pattern Corporation

question 194

Essay

On October 10, the board of directors of Pattern Corporation declared a 15% stock dividend.On October 10, the company had 10,000 shares of $1 par common stock issued and outstanding with a market price of $16 per share.The stock dividend will be distributed on October 31 to shareholders of record on October 25.Journalize the entries needed for the declaration and distribution of the stock dividend.

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Definitions:

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its relevant period.

Interest Expense

The cost incurred by an entity for borrowed funds, often reflected in financial statements.

Market Rate

The market rate refers to the current price or interest rate of a commodity, security, labor, or currency in the marketplace.

Straight-Line Amortization

A method of reducing the value of an intangible asset over a fixed period of time evenly.