Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
a).
Journal Entry:-
Stock dividend A/c (1,050,000 × 10% × $52) Dr. $5,460,000
To paid in capital in excess of par-common stock A/c $105,000
($1,050,000 × 10%)
To common stock A/c $5,355,000
(Being the declaration and the distribution of the dividend is recorded)
For recording this we debited the stock dividend as it increased the dividend account and credited the common stock and paid in capital as it increased the stockholder equity
b). Now the effect is presented below:
Assets + Liabilities = Stockholder ‘s Equity Amount ($)
Retained earnings -5,460,000
Paid in capital in excess of par-common stock 105,000
Common stock 5,355,000
c).
Journal Entry
Stock dividend A/c (1,050,000 × 100% × $1) Dr. $1,050,000
To Common stock A/c $1,050,000
(Being the declaration and the distribution of the dividend is recorded)
For recording this we debited the stock dividend as it increased the dividend account and credited the common stock as it increased the stockholder equity
d). Now the effect is
Assets + Liabilities = Stockholder ‘s Equity Amount ($)
Retained earnings -1,050,000
Common stock $1,050,000
