Chapter 10, Problem 22AE

Accounting for cash and stock dividends (Learning Objectives 4 & 5) 10-15 min.

Portrait People, Inc., is authorized to issue 500,000 shares of $4 par common stock The company issued 74,000 shares at $7 per share, and all 74,000 shares are outstanding. When the market price of common stock was $11 per share, Portrait People, Inc. declared and distributed a 20 percent stock dividend. Later, Portrait People, Inc., declared and paid a $0.60 per share cash dividend.

Requirements

1. 1. Journalize the declaration and distribution of the stock dividend.
2. 2. Journalize the declaration and the payment of the cash dividend.