The Moser Company wants to double its number of shares outstanding. The company president asks the controller how a two-for-one stock split differs from a 100% stock dividend. Moser has 300,000 shares ($1 par) outstanding at a market price of $20 per share. The current stockholders’ equity section is as follows:
Common shares, 300,000 issued and outstanding ........$ 300,000
Additional paid-in capital ................ 2,300,000
Retained earnings ................... 4,500,000
1. Prepare the journal entry for a two-for-one stock split.
2. Prepare the journal entry for a 100% stock dividend.
3. Explain the difference between a two-for-one stock split and a 100% stock dividend.