Stock Dividends

The Stockholders' Equity category of Worthy Company's balance sheet as of January 1, 2016, appeared as follows:

Common stock, $10 par, 38,000 shares issued and outstanding	$380,000
Additional paid-in capital	100,000
Retained earnings	400,000
Total stockholders' equity	$880,000

The following transactions occurred during 2016:

Declared a 10% stock dividend to common stockholders on January 15. At the time of the dividend, the common stock was selling for $30 per share. The stock dividend was to be issued to stockholders on January 30, 2016.

Distributed the stock dividend to the stockholders on January 30, 2016.

Required:

1. Record the 2016 events. Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

Journal

Balance Sheet

Income Statement

Stockholders

Net

Date

Description

Debit

Credit

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

Jan. 15

Journal

Balance Sheet

Income Statement

Stockholders

Net

Date

Description

Debit

Credit

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

Jan. 30

2. Develop the Stockholders' Equity category of Worthy Company's balance sheet as of January 31, 2016, after the stock dividend was issued.

Worthy Company
Partial Balance Sheet
January 31, 2016
Stockholders' equity
	$
Total stockholders' equity	$

What effect did those transactions have on total stockholders equity?

(Increase, decrease, did not change )(retained earnings, contributed capital)(retained earnings, contributed capital)

These transactions _____ total stockholders' equity. They reclassified some equity from the_______ category to the ______ category.