Nelly, Inc. had 320,000 shares of $2 par value common stock issued and outstanding as of December 15, 2024. The company is authorized to issue 1,300,000 common shares. On December 15, 2024, Nelly declared a 40% stock dividend when the market value for Nelly’s common stock was $7 per share. The stock was issued on Dec. 30.

Requirements 

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

2. How many shares of common stock are outstanding after the dividend?