Answer:
$40,000
Explanation:
Stock dividend is the payment of dividend to stockholder in the form of stock/shares of the company. Stock are issued at the market price and the value of the dividend is transferred from the retained earning to the add-in-capital accounts.
Dividend Value = 10,000 x 20% = 2,000 shares
Value is calculated using market value of the stock
Value of Dividend = 2,000 x $20 = $40,000
Par Value of Stocks = $1 x 2,000 = $2,000
Add-in-capital excess of par common stock = ($20-$1) x 2,000 = $38,000
Journal Entry will be as follow
Dr. Retained Earning $40,000
Cr. Common stock $2,000
Cr. Add-in-Capital excess of par common $38,000
