Chapter 13, Problem 7QS

To determine

Concept Introduction:

Stock Dividend:

The Stock dividend is the number of shares given as dividend to the shareholders. The Stock dividend is declared first and shares are issued later. There are two journal entries made, one at the time of declaration of stock dividend and another at the time of issuance of shares.

Small Stock Dividend:

The Stock Dividend below 25% is called a small stock dividend. To record the declaration of small stock dividends, the retained earnings is debited with the market value of shares issued as stock and common stock dividend distributable account is credited with the same amount. At the time of issuing shares, the common stock dividend distributable is debited with the market value of shares issued as stock and common stock is credited with the par value of shares issued as stock and Paid in excess of par value- common stock is credited with the excess amount.

To prepare: The Stockholder’s Equity section after the stock dividend.