Recording and Reporting Stock Dividends and Stock Splits

Bailey Corporation has the following stockholders equity account balances.

Common stock, $12 par, 26,000 shares outstanding	$312,000
Paid-in capital in excess of par	91,000
Retained earnings	650,000
Total stockholders equity	$1,053,000

The corporation will triple the number of shares currently outstanding (to 78,000 shares) by taking one of the following separate actions.

1. Issue a 200% stock dividend ( 52,000 additional shares) and capitalize retained earnings on the basis of par value.
2. Issue a stock split (3-for-1 stock split; where three new shares are issued for each old share) by changing par value per share proportionately.

Required

a. Provide the journal entry that should be made for each alternative action.
Note: If a journal entry isn't required for any of the actions shown, select "N/ADebit" and "N/ACredit" as the account names and leave the Dr. and Cr. answers blank (zero).

Alternative One Alternative Two b. Complete the following schedule that compares the effects of the two alternative actions