Company Z Has 8 Million Shares of Common Stock Authorized

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.
a.
1)Prepare the journal entry if the company declares and distributes a 10% stock dividend.
2)Show the effect of the 10% stock dividend on assets,liabilities,and stockholders' equity.
b.
1)Prepare the journal entry if the company declares and distributes a 100% stock dividend.
2)Show the effect of the 100% stock dividend on assets,liabilities,and stockholders' equity.
c.Compare the two stock dividends in parts a and b above.Explain why the 100% stock dividend is not 10 times larger than a 10% stock dividend.