Chapter 21, Problem 4SEB

STOCK DIVIDENDS Martinez Company currently has 200,000 shares of $1 par common stock outstanding. On March 15, a 5% stock dividend was declared to shareholders of record on April 2, distributable on April 14. Market value of the common stock was estimated at $13 per share.

1. Prepare journal entries for the declaration and distribution of the 5% common stock dividend.

2. Assume Martinez Company declared a stock dividend of 30% rather than 5%. Prepare journal entries for the declaration and distribution of the 30% common stock dividend.