Stock Dividends
The balance sheet of Carmen Corporation shows the following:
|
Common stock, $1 stated value, 80,000 shares issued and outstanding |
$ 80,000 |
|
Paid in capital in excess of stated value |
1,120,000 |
|
Retained earnings |
350,000 |
A 25% stock dividend is declared, with the board of directors authorizing a transfer from Retained Earnings to Common Stock at the stated value of the shares.
1. Provide entries to record the declaration and issuance of the stock dividend.
2. What was the effect of the issuance of the stock dividend on the ownership equity of each stockholder in the corporation?
3. Provide entries to record the declaration and issuance of the dividend if the board of directors had elected to declare a 15% stock dividend instead of 25%. The market value of the stock is $10 per share after the 15% stock dividend is issued.