Chapter 13, Problem 13.27E

Journalizing a stock dividend and reporting stockholders' equity

The stockholders' equity of Poolside Occupational Therapy, Inc. on December 31, 2015, follows:

On April30, 2 01 6, the market price of Poolside's common stock was $15 per share and the company declared a 8% stock dividend. The stock was distributed on May 15.

Requirements

1. 1. Journalize the declaration and distribution of the stock dividend.
2. 2. Prepare the stockholders' equity section of the balance sheet as of May 31, 2016. Assume Retained Earnings are $124,000 on April 30, 2016, before the stock dividend, and the only change made to Retained Earnings before preparing the balance sheet was closing the Stock Dividends account.