Chapter 21, Problem 4SEA

STOCK DIVIDENDS Kaufman Company currently has 200,000 shares of $1 par common stock outstanding. On March 15, a 10% stock dividend was declared to shareholders of record on April 2, distributable on April 14. Market value of the common stock was estimated at $5 per share.

1. Prepare journal entries for the declaration and distribution of the 10% common stock dividend.

2. Assume Kaufman Company declared a stock dividend of 30% rather than 10%. Prepare journal entries for the declaration and distribution of the 30% common stock dividend.