Question

Douglas McDonald Company's balance sheet included the following shareholders' equity accounts at December 31, 2010:
On March 16, 2011, a 4% common stock dividend was declared and distributed. The market value of the common stock was $21 per share. Fractional share rights represented 2 million equivalent whole shares. Cash was paid in lieu of the fractional share rights.

Required:
1. What is a fractional share right?
2. Prepare the appropriate entries for the declaration and distribution of the stock dividend.



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  • CreatedJuly 05, 2013
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