EarnhartCorporation has outstanding3,000,000shares of common stock with a par value of $10each. The balance in its Retained Earnings account at January 1, 2020, was $24,000,000, and it then had Paid-in Capital in Excess of ParCommon Stock of $5,000,000. During 2020, the company's net income was $4,700,000. A cash dividend of $0.60a share was declared on May 5, 2020, and was paid June 30, 2020, and a6% stock dividend was declared on November 30, 2020, and distributed to stockholders of record at the close of business on December 31, 2020. You have been asked to advise on the proper accounting treatment of the stock dividend.

The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows.

October 31, 2020$31November 30, 2020$34December 31, 2020$38

(a)Prepare the journal entry to record (1) the declaration and (2) payment of the cash dividend.(b)Prepare the journal entry to record (1) the declaration and (2) distribution of the stock dividend.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)(1)

May 5

June 30

Nov. 30

Dec. 31

(a)(2)

May 5

June 30

Nov. 30

Dec. 31

(b)(1)

May 5

June 30

Nov. 30

Dec. 31

(b)(2)

May 5

June 30

Nov. 30

Dec. 31

eTextbook and Media

List of Accounts

Prepare the stockholders' equity section (including schedules of retained earnings and additional paid-in capital) of the balance sheet ofEarnhartCorporation for the year 2020 on the basis of the foregoing information.(List items that increase retained earnings first.)

Schedule of Additional Paid-in Capital

December 31, 2020

For the Year Ended December 31, 2020

For the Quarter Ended December 31, 2020

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

$

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

$

Statement of Retained Earnings

December 31, 2020

For the Year Ended December 31, 2020

For the Quarter Ended December 31, 2020

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

$

Add

Less

:

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

Add

Less

:

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

$

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Expenses

Net Income / (Loss)

Retained Earnings, January 1

Retained Earnings, December 31

Revenues

Stock Dividends

Total Expenses

Total Revenues

$

EARNHARTCORPORATION

Stockholders' Equity

December 31, 2020

For the Year Ended December 31, 2020

For the Quarter Ended December 31, 2020

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Retained Earnings, January 1

Retained Earnings, December 31

Stock Dividends

$

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Retained Earnings, January 1

Retained Earnings, December 31

Stock Dividends

Additional Paid-in Capital

Additional Paid-in Capital, January 1

Additional Paid-in Capital, December 31

Cash Dividends

Common Stock

Dividends

Excess of fair value over par value of common stock

Retained Earnings, January 1

Retained Earnings, December 31

Stock Dividends

Additional Paid-in Capital

Capital Stock

Current Assets

Current Liabilities

Intangible Assets

Long-term Investments

Long-term Liabilities

Property, Plant and Equipment

Stockholders' Equity

Total Assets

Total Capital Stock

Total Current Assets

Total Current Liabilities

Total Intangible Assets

Total Liabilities

Total Liabilities and Stockholders' Equity

Total Long-term Investments

Total Long-term Liabilities

Total Paid-in Capital

Total Paid-in Capital and Retained Earnings

Total Property, Plant and Equipment

Total Stockholders' Equity

$