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Prepare the necessary journal entries for stock dividend

Problem:

The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Five million shares are issued and outstanding.

(a) How much is the debit to retained earnings if the board votes a 2-for-1 stock split?

(b) Prepare the necessary journal entries if the board votes a 100% stock dividend.

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Accounting Basics: Prepare the necessary journal entries for stock dividend

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