2294

Question 1

2294.17

Answer 1

Large stock dividends are usually accounted for on the basis of the par or stated value of the stock rather than on the basis of fair value. To illustrate, assume that Company Y has outstanding 1,000 shares of $10 par common stock. The entry to record the declaration of a 40% stock dividend is:

Retained Earnings (400 x $10 par) 4,000
Stock Dividends Distributable 4,000