Company Z Has 8 Million Shares of Common Stock Authorized

question 76

Essay

Company Z has 8 million shares of common stock authorized with a par value of $1 and a market price of
$72. There are 4 million outstanding shares and 1 million shares held in treasury stock. Prepare the journal entry
and show the effect on assets, liabilities and stockholders' equity if the company declares and distributes a 10% stock dividend. Do the same for a 100% stock dividend. Compare the two to determine whether a 100% stock dividend is the same as a 10% dividend, except that it is 10 times larger.