The stockholders' equity for Sweet TreatsSweet Treats Corporation on JuneJune 1212, 20172017, follows Stockholders' Equity
Common stock, $0.75 par, 3,000,000 shares
	authorized, 500,000 shares issued	$375,000
Paid-in capital in excess of parcommon		1,076,267
Retained earnings		7,111,000
Accumulated other comprehensive income (loss)		-210,000
	Total stockholders' equity	$8,352,267

1.

Journalize the declaration and distribution of the stock dividend.

2.

Prepare the stockholders' equity section of the balance sheet after the stock dividend.

3.

Why is total stockholders' equity unchanged by the stock dividend?

4.

Suppose

Sweet TreatsSweet Treats

had a cash balance of

$ 620 comma 000$620,000

on

JuneJune1313,

20172017.

What is the maximum amount of cash dividends

Sweet TreatsSweet Treats

can declare?

Requirement 1. Journalize the declaration and distribution of the

55%

stock dividend. (Record debits first, then credits. Exclude explanations from any journal entries.)

Journal Entry

Date

Accounts

Debit

Credit

June

12

Requirement 2. Prepare the stockholders' equity section of the balance sheet after the stock dividend. (Enter the accounts in the proper order for the stockholders' equity section of the balance sheet. Use parentheses or a minus sign for numbers to be subtracted.)

Balance Sheet (Partial)
	Stockholders' Equity:
				$		par,		shares
		shares
	Total stockholders' equity

Requirement 3. Why is total stockholders' equity unchanged by the stock dividend?

The stock dividend did not change total stockholders' equity because the company gave its shareholders

a promissory note

cash

no assets

.The company merely

agreed to pay later.

issued dividend checks totaling $375,000.

transferred $375,000 from Retained Earnings to Common Stock and Paid-in Capital in Excess of Par.

Requirement 4. Suppose

STST

had a cash balance of

$ 620 comma 000$620,000

on

JuneJune

1313,

20172017.

What is the maximum amount of cash dividends

STST

can declare?

STST's

maximum cash dividends

are unlimited.

cannot exceed the balance in the Cash account, $620,000

cannot exceed the balance in the Common Stock account, $393,750

cannot exceed the balance in the Retained Earnings account, $6,736,000

.