Karate

Schools, Inc. is authorized to issue 200,000 shares of

$2

par common stock. The company issued

77,000

shares at

$3

per share. When the market price of common stock was

$5

per share,

Karate

Schools declared and distributed a

6%

stock dividend. Later,

Karate

Schools declared and paid a

$0.30

per share cash dividend.

Journalize the declaration and the distribution of the stock dividend. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

First, journalize the declaration of the stock dividend.