Walmart has outstanding 500,000 shares of $1 par common stock which was sold originally at a price of $6 per share. Retained earnings has a balance of $2,000,000.

Required:

1.Prepare the journal entry for the following transaction. On May 31, Walmart declares a small (6%) stock dividend, when the market price of the common stock is $8 per share.

2.Assume, instead, that Walmart declares a large (40%) stock dividend on May 31. Prepare the appropriate journal entry.