On September 15, 2018, the Scottie Company Board of Directors

question 146

Essay

On September 15, 2018, the Scottie Company board of directors declared a 10% stock dividend on common shares. The shares are to be distributed on October 10, 2018, to shareholders of record on October 1, 2018. The market price per share on the date of declaration was $24 while the market price on the date of distribution was $26. The common stock has a par of $5 per share and there were 1,000,000 shares outstanding prior to the declaration of the stock dividend.
Required:
Prepare any necessary journal entries to record the above transactions.

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Definitions:

Social Security Tax

A tax that funds the Social Security program, collected from both employers and employees.

Medicare Tax

A federal tax that funds Medicare, the U.S. government's health care program for seniors and certain individuals with disabilities, withheld from an employee's paycheck.

Gross Pay

The total amount of money an employee earns before any deductions are taken out.

Net Pay

The amount of an employee's earnings after all deductions, such as taxes and retirement contributions, have been subtracted.