Immediately Before a 15% Stock Dividend Was Declared and Distributed

question 18

Essay

Immediately before a 15% stock dividend was declared and distributed on 20,000 shares of par $8 stock, the market price of the Coolidge Corporation's stock was $18. Coolidge has total liabilities of $150,000 and total shareholders' equity of $450,000. Prior to the stock dividend, current assets were $250,000, and there were no long-term liabilities.
Required:
(1) Give the journal entry to record the declaration and distribution of the stock dividend.
(2) Calculate Coolidge's current ratio immediately after the stock dividend and comment.

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Definitions:

Theoretical Model

An abstract representation that explains a concept or phenomenon by using symbols, words, or diagrams to simplify and communicate complex ideas.

Katz's Skills Model

A theory that identifies three fundamental competencies (technical, human, and conceptual skills) necessary for successful management at different organizational levels.

Blake And Mouton's

Refers to the Managerial Grid Model developed by Robert Blake and Jane Mouton, which argues that the most effective managers demonstrate high concern for both people and production.

Burns's Transactional Leadership

A leadership model proposed by James MacGregor Burns where leaders promote compliance among followers through a system of rewards and punishments.