Pacifica Papers Inc. needed to conserve cash, so the board of directors declared a 15% common share dividend on June 30, 2014, instead of a cash dividend, distributable on July 15, 2014. Because performance during 2014 was better than expected, the company’s board of directors declared a $0.40 per share cash dividend on November 15, 2014, payable on December 1, 2014, to shareholders of record on November 30, 2014. The equity section of Pacifica’s December 31, 2013, balance sheet showed:

Common shares, unlimited shares authorized,

650,000 shares issued and outstanding........................................................ $6,240,000

Retained earnings............................................................................................. 2,400,000

Required

1. Journalize the declaration of the share dividend. The market prices of the shares were $16.00 on June 30, 2014, and $17.60 on July 15, 2014.

2. Journalize the declaration of the cash dividend.

3. Prepare the equity section of the balance sheet at December 31, 2014, assuming net income earned during the year was $2,356,800.