Question

Brief Exercise 15-14 Pearl Corporation has outstanding 394,000 shares of $10 par value common stock. The corporation declares a 100% stock dividend when the fair value of the stock is $71 per share. Prepare the journal entries for both the date of declaration and the date of distribution. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Declaration Da te Distribution Date Click if you would like to Show Work for this question: Open Show Work

Answer 1

Date	Account	Debit	credit
1	Retained earning	3,940,000
	stock dividend distributable		3,940,000
	[stock dividend declared]{394000*100%*10}
2	stock dividend distributable	3,940,000
	common stock		3,940,000
	[being dividend paid]

In case of large stock dividend ,distribution is credited with par value not fair value.