Roily Racing Motors is authorized to issue 500,000 shares of \($1\) par common stock. The company issued 80,000 shares at \($4\) per share, and all 80,000 shares are outstanding. When the market price of common stock was \($5\) per share, Roily Racing Motors declared and distributed a 10% stock dividend. Later, Roily Racing Motors declared and paid a \($0.50\) per share cash dividend.

Requirements

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

2. Journalize the declaration and the payment of the cash dividend.