Question: Journalizing a stock dividend and reporting stockholders' equity The stockholders' equity of Pondwood Occupational Therapy, Inc. on December 31, 2015, follows:
On April 30, 2016, the market price of Pondwood's common stock was $12 per share and the company declared a 10% stock dividend. The stock was distributed on May 15.
Requirements: 1. Journalize the declaration and distribution of the stock dividend.
2. Prepare the stockholders' equity section of the balance sheet as of May 31, 2015. Assume Retained Earnings are $120,000 on April 30, 2016, before the stock dividend, and the only change made to Retained Earnings before preparing the balance sheet was closing the Stock Dividends account.