Douglas McDonald Company's balance sheet included the following shareholders' equity accounts at December 31, 2010: On March

Question:

Douglas McDonald Company's balance sheet included the following shareholders' equity accounts at December 31, 2010:

On March 16, 2011, a 4% common stock dividend was declared and distributed. The market value of the common stock was $21 per share. Fractional share rights represented 2 million equivalent whole shares. Cash was paid in lieu of the fractional share rights.

Required:

1. What is a fractional share right?

2. Prepare the appropriate entries for the declaration and distribution of the stock dividend.

Common Stock
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Distribution
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