PStock and Cash Dividends Earnhart Corp. has outstanding shares of common stock of a par value of $ each. The balance in its Retained Earnings account at January was $ and it then had PaidIn Capital in Excess of ParCommon Stock of $ During the companys net income was $ A cash dividend of $ a share was declared on May and was paid June and a stock dividend was declared on November and distributed to stockholders of record at the close of business on December You have been asked to advise on the proper accounting treatment of the stock dividend.
The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows.
October $
November $
December $
Instructions
a Prepare the journal entry to record the declaration and payment of the cash dividend.
b Prepare the journal entry to record the declaration and distribution of the stock dividend.
c Prepare the stockholders equity section
