Preparation of Journal entries to record stock dividend and stock split.
Klein Corporation\'s stockholders\' equity section at December 31, 2001 appears below:
Stockholders\' equity Paid-in capital
Common stock, $10 par, 50,000 outstanding $500,000
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Paid-in capital in excess of par
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150,000
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Total paid-in capital
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$650,000
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Retained earnings
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150,000
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Total stockholders\' equity
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$800,000
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On June 30, 2002, the board of directors of Klein Corporation declared a 15% stock dividend, payable on July 31, 2002, to stockholders of record on July 15, 2002. The fair market value of Klein Corporation\'s stock on June 30, 2002, was $12.
On December 1, 2002, the board of directors declared a 2 for 1 stock split effective December 15, 2002. Klein Corporation\'s stock was selling for $20 on December 1, 2002, before the stock split was declared. Par value of the stock was adjusted. Net income for 2002 was $240,000 and there were no cash dividends declared.
INSTRUCTIONS
Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split