Accounting for stock dividends (Learning Objectives 5 & 7) 10–15 min.

The stockholders’ equity for Dunelit, Inc., on December 31, 2013, follows:

Paid-in Capital:

Common Stock, $1 par, 450,000 shares authorized, 50,000 shares issued and outstanding Paid-in Capital in Excess of Par Total Paid-in Capital Retained Earnings Total Stockholders’ Equity

$ 50,000 550,000

$600,000 290,000

$890,000 Stockholders’ Equity On January 31, 2014, the market price of Dunelit’s common stock was $17 per share and the company distributed a 20% stock dividend.

Requirements 1. Journalize the declaration and distribution of the stock dividend.

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

AppendixLO1