Carpenter Schools,Inc

question 159

Essay

Carpenter Schools,Inc.is authorized to issue 500,000 shares of $2 par common stock.The company issued 106,000 shares at $6 per share.When the market price of common stock was $10 per share,Carpenter declared and distributed a 10% stock dividend.Later,Carpenter declared and paid a $0.10 per share cash dividend.
Prepare the journal entries to record these transactions.Explanations are not required.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds.

Capital Structure

The composition of a company's funding, including debt, equity, and other financial instruments, which defines how a company finances its overall operations and growth.

Debt

Money that is owed or due to be paid, typically resulting from borrowing funds to be repaid with interest.

Financial Leverage

Financial leverage is the use of borrowed money (debt) to amplify the potential returns from an investment or project.