Problem

Accounting for stock dividendsMerino Corporation issued a 4 percent stock dividend on 30,0...

Accounting for stock dividends

Merino Corporation issued a 4 percent stock dividend on 30,000 shares of its $10 par common stock. At the time of the dividend, the market value of the stock was $25 per share.

Required

a. Compute the amount of the stock dividend.


b. Show the effects of the stock dividend on the financial statements using a horizontal statements model like the following one.

Assets = Liab. + Com. Stock + PIC in Excess + Ret Earn.

Rev. - Exp. = Net Inc.

Cash Flow


c. Prepare the journal entry to record the stock dividend.

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