Stock Dividends and Stock Splits}

Murphy Products Ltd.'s statement of financial position includes total assets of \(\$ 1,326,000\) and the following equity account balances at December 31, 2018:

Murphy's common shares are selling for \(\$ 17\) per share on December 31, 2018.
\section*{Required:}
1. Determine how much Murphy Products would have reported for total assets and retained earnings on December 31,2018 , if the firm had declared and paid a \(\$ 5,000\) cash dividend on December 31, 2018. Prepare the journal entry for this cash dividend.
2. Determine how much Murphy would have reported for total assets and retained earnings on December 31, 2018, if the firm had issued a \(5 \%\) stock dividend on December 31, 2018. Prepare the journal entry for this stock dividend.
3. CONCEPTUAL CONNECTION How much would Murphy have reported for total assets and retained earnings on December 31, 2018, if the firm had effected a 3-for-1 stock split on December 31, 2018? Is a journal entry needed to record the stock split? Why or why not?
Problem

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Common shares, no par, 10,000 shares issued and outstanding Retained earnings $298,000 206,000 Total shareholders' equity $504,000