Problem

Journalizing a stock dividend and reporting stockholders’ equity [10-15 min]The stockholde...

Journalizing a stock dividend and reporting stockholders’ equity [10-15 min]

The stockholders’ equity of Pondside Occupational Therapy, Inc., on December 31, 2011, follows:

STOCKHOLDERS’ EQUITY

Paid-in capital:

 

Common stock, $1 par, 1,250 shares authorized,

 

530 issued..........................................................

$ 530

Paid-in capital in excess of par—common............

2,120

Total paid-in capital...........................................

2,650

Retained earnings..........................................................

121,000

Total stockholders’ equity.............................................

$ 123,650

On April 30, 2012, the market price of Pondside’s common stock was $11 per share and the company distributed a 10% stock dividend.

Requirements

1. Journalize the distribution of the stock dividend.


2. Prepare the stockholders’ equity section of the balance sheet after the stock dividend.

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