The stockholders’ equity of the Sadler Company is as shown:

Common stock, $10 par ........... $250,000

Additional paid-in capital on common stock .. 150,000

Retained earnings .............. 200,000

$600,000

The company is considering the declaration and issuance of a stock dividend at a time when the market price is $30 per share.

Required

1. Assuming the board of directors recommends a 6% stock dividend, prepare:

a. the journal entry at the date of declaration

b. the journal entry at the date of issuance

c. the stockholders’ equity after the issuance

2. Assuming, instead, that a 40% stock dividend is recommended, repeat (a), (b), and (c) of Requirement 1.