The stockholders equity for Shami, Inc., on December 31, 2011, follows: Stockholders Equity Paid-in Capital: Common Stock

Question:

The stockholders’ equity for Shami, Inc., on December 31, 2011, follows:

Stockholders’ Equity

Paid-in Capital:

Common Stock, $1 par, 900,000 shares authorized,

30,000 issued and outstanding........ .$ 30,000

Paid-in Capital in Excess of Par.......... 120,000

Total Paid-in Capital.............. 150,000

Retained Earnings.............. 330,000

Total Stockholders’ Equity..........$480,000

On August 31, 2012, the market price of Shami, Inc.’s, common stock was $22 per share and the company distributed a 20% stock dividend.

Requirements

1. Journalize the declaration and distribution of the stock dividend.

2. Prepare the stockholders’ equity section of the balance sheet after the stock dividend..

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