Help with accounting!!!!!!!?

Question

20% stock dividends on 40,000 common stock of $25 stated value common stock. Market value $70 a share. What is the equity entry. How much is now in common stock, paid in expenses and retained earnings?

Answer 1

20% falls on the borderline between a small size dividend. The size of a stock dividend determines how it is valued. A small size dividend (less than 20–25% of outstanding shares) is usually valued at the market value of the stock. A large size dividend (more than 20–25% of outstanding shares) is usually valued at par or stated value. In this case, we shall treat it as a small size dividend. When the dividend is declared, your entry:
Dr Retained Earnings {(20% × 40,000 shares) × $70} $560,000
Cr Common Stock Dividend Distributable (8,000 shares to be issued × $25 par) $200,000
Cr Additional Paid-in-Capital $360,000

When the dividend is distributed, your entry:
Dr Common stock dividend distributable $200,000
Cr Common stock $200,000