Answer and Explanation:
a.1 The Journal entry is shown below:-
Stock dividend Dr, $1,980,000 (2,200,000 × $18 × 5%)
To Stock dividend distributable $1,650,000 (2,200,000 × $15 × 5%)
To paid in capital in excess of par-common stock
$330,000 (2,200,000 × ($18 - $15) × 5%)
(Being stock dividend is recorded)
2. Stock dividend distributable Dr, $1,650,000
To common stock $1,650,000
(Being stock dividend is recorded)
b. The computation of amounts before the stock total paid in capital, total retained earnings, and total stockholders' equity is shown below:-
Total paid in capital is
= $33,000,000 + $9,000,000
= $42,000,000
Total retained earning = $89,550,000
Total stockholder equity is
= $42,000,000 + $89,550,000
= $1,31,550,000
c. The computation of amount after the stock dividend total paid-in capital, total retained earnings, and total stockholders' equity is shown below:-
Total paid in capital is
= $42,000,000 + $1,980,000
= $43,980,000
Total retained earning is
= $89,550,000 - $1,980,000
= $87,570,000
Total stockholder equity is
= $43,980,000 + $87,570,000
= $131,550,000
