Describe the journal entry for a stock dividend on common stock (which has a par value)....

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Accounting

Describe the journal entry for a stock dividend on common stock(which has a par value). Be sure to address the difference betweena small and large stock dividend with regard to amounts used toadjust retained earnings. Since you are describing the journalentry, remember to address what accounts are used and anycorresponding debits and credits.

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Stock DividendsA stock dividend does not involve cash Rather it isthe distribution of more shares of the corporations stock Perhapsa corporation does not want to part with its cash but wants togive something to its stockholders If the board of directorsapproves a 10 stock dividend each stockholder will get anadditional share for each 10 shares heldSince every stockholder received additional shares and sincethe corporation is no better off after the stock dividend thevalue of each share should decrease In other words since thecorporation is the same before and after the stock dividend thetotal market value of the corporation remains the See Answer

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