Answer:
The Journal entries are as follows:
(1) On July 1,
Retained earnings A/c [1,166 × $14] Dr. $16,324
To common stock distributable [1,166 × $2] $2,332
To paid-in-capital in excess of par- common stock $13,992
(To record declaration of stock dividend)
(2) On July 20,
common stock distributable A/c Dr. $2,332
To common stock $2,332
(To record distribution of the stock dividend)
Workings:
Common stock outstanding = 10,600 shares
Stock dividend declared = 11%
No. of common stock declared as dividend = 10,600 × 11%
= 1,166 shares
