1. The Blue Sky Company's board of directors authorized a 10% common stock dividend on March 31 to be distributed to shareholders on April 30. At the time of the authorization, the company had 4,000,000 shares of common stock outstanding with a par value per share of $1, a market value per share of $45, and a book value of $30 per share. The shares were distributed on April 30.
2. The Grey Sky Company's board of directors authorized a 3-for-1 common stock split on May 31 on all shares outstanding as of June 15 to be distributed on June 30. At the time of the authorization, the company had 2,500,000 shares of common stock outstanding with a par value per share of $6, a market value per share of $165, and a book value of $80 per share. The shares were distributed on June 30.
3. The Red Sky Company's board of directors authorized a 75% common stock dividend on July 1 to be distributed to shareholders on August 1. At the time of the authorization, the company had 10,000,000 shares of common stock outstanding with a par value per share of $10, a market value per share of $85, and a book value of $50 per share. The shares were distributed on August 1.
Instructions: Assume that each company has sufficient retained earnings for each of the above decisions.
a) Prepare all of the necessary journal entries for each of the above situations.