Oct. $31.$ Declared semiannual dividends of $$1\mathrm{.}60$ per share on the preferred stock and $$0\mathrm{.}13$ per share on the common stock $($before the stock dividend$).$ In addition, a $2\%$ common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $$36.$

Oct. $31$ Cash Dividends $$

Cash Dividends Payable

$$

$$

$$

$q,$

Oct. $31$

$$

Stock Dividends Distributable $q,$

$$

$x$

Paid$-$In Capital in Excess of Palsom Stock $q,$

$$

$$

$x$

$x$

$$

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On the date of declaration of a cash dividend, it becomes legally binding. How do stock dividends affect stockholders' equity?

Dec. $31.$ Paid the cash dividends and issued the certificates for the common stock dividend.

Dec. $31$

$$

$$

$x$

Dec. $31$

$$

$$

$$ Common Stock $x$

$$

$x$

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