RBC Financial Group provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services on a global basis. On March 3, 2006, a press release announced the following:
Royal Bank of Canada ( RY: TSX, NYSE, SWX) today announced that its Board of Directors has declared a stock dividend, which has the same effect as a two- for- one split of its common shares.
RBC’s last stock dividend was paid on October 5, 2000.
The Board of Directors today also declared a quarterly common share cash dividend of $ 0.72 per share, which represents $ 0.36 per share on a post- stock dividend basis. This dividend of $ 0.36 per share is payable on May 24, 2006, to common shareholders of record on April 25, 2006.
1. Prepare any journal entries that RBC Financial should make as the result of information in the preceding report. Assume that the company has 1.3 million shares outstanding with a market value of $ 47 per share and an average issue price of $ 5.60.
2. What factors did the board of directors consider in making this decision?

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