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:

Greatest Potential Risk

Refers to the highest level of uncertainty or danger that could impact the success or existence of a project or investment.

Direct Investment

An investment in the form of a controlling ownership in a business in one country by an entity based in another country.

Mexican Market

Can pertain to either the physical marketplaces within Mexico known for their vibrant commerce or the broader economic and consumer market of Mexico.

Financial Resources

Economic capital or funds available to a business or individual for the purpose of investment, operational needs, or growth.