Question: The stockholders' equity section of Warm Ways Inc.'s balance sheet at January 1, 2014, shows:
Warm Ways reported net income of $9,250,000 for 2014, declared and paid the preferred stock cash dividend, and declared and paid a $0.25 per share cash dividend on 1 million shares of common stock. The company also declared and distributed a 10% stock dividend on its common shares. When the stock dividend was declared, 1 million common shares were outstanding, and the market price of common stock was $135 per share.
Required: 1. Prepare journal entries to record the three dividend "events" that took place during 2014.
2. If the company's common stock was valued at $135 per share when the stock dividend was declared, what would the stock price be just after the dividend shares were distributed?