The shareholders’ equity for Queen’s Windows Inc. on June 30, 2020 (end of the company’s fiscal year), follows:

Common shares, 800,000 shares authorized, 80,000 shares issued
and outstanding ...................................... $300,000
Retained earnings ..................................... 380,000
Total shareholders’ equity ...................... $680,000

On August 8, 2020, the company declared a 20 percent stock dividend. On that date, the market price of the common shares was $12.00 per share. Queen’s Windows Inc. issued the dividend shares on August 31, 2020.

Required

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

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