Team 5:
Sanderson
Corporation is a privately held corporation with a December 31 year end. Sanderson Corporation announced a 10% stock
dividend for its common shareholders on December 31, 2022. The stock dividend
meets the accounting requirements to be accounted for as a stock dividend. The company currently has 500,000 shares of
$1 common stock authorized and 50,000 shares of $10 par value common stock
issued and outstanding. All of the common stock was issued for $100 per share
on November 1, 2021, and currently has a fair value of $150.
Accounting Issue:
How should Sanderson Corporation include
the impact of the stock dividend in the 12/31/22 financial statements?
|
a.
Codification
Reference:
b.
Your
interpretation of the guidance for how it applies to Sanderson
Corporation.
c.
If
necessary, prepare a journal entry for the company as of December 31,
2022. If a journal entry is not
necessary, indicate N/A.
DEPAUL UNIVERSITY SCHOOL OF ACCOUNTANCY AND MIS ACCOUNTING RESEARCH ASSIGNMENT #2 Instructions: For the case assigned to your group, you will perform the 5 Steps in Research. Assume that each company is privately held and does not use industry specific guidance. In selecting the correct directly on point authoritative guidance remember the following sections will not provide directly on point guidance: · Section 00: Status · Section 05: Overview and Summary · Section 10: Objective · Section 15: Scope and Scope Exceptions · Section 20: Glossary · Section 55: Implementation Guidance and Illustrations: Any answers that use these sections as the directly on point guidance will be incorrect. If you determine that a journal entry is necessary remember that the Cash account will not be used. Also, remember that you will need to determine if the correct journal entry was never recorded versus if a “correcting” journal entry needs to be recorded. Team 5: Sanderson Corporation is a privately held corporation with a December 31 year end. Sanderson Corporation announced a 10% stock dividend for its common shareholders on December 31, 2022. The stock dividend meets the accounting requirements to be accounted for as a stock dividend. The company currently has 500,000 shares of $1 common stock authorized and 50,000 shares of $10 par value common stock issued and outstanding. All of the common stock was issued for $100 per share on November 1, 2021, and currently has a fair value of $150. Accounting Issue: How should Sanderson Corporation include the impact of the stock dividend in the 12/31/22 financial statements? a. Codification Reference: b. Your interpretation of the guidance for how it applies to Sanderson Corporation. c. If necessary, prepare a journal entry for the company as of December 31, 2022. If a journal entry is not necessary, indicate N/A. Date Account Name Debit Credit