The stockholders’ equity section of TVX Company on February 4 follows.

On February 5, the directors declare a 20% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $40 per share on February 5 before the stock dividend.

1. Prepare entries to record both the dividend declaration and its distribution.
2. Prepare the stockholders’ equity section after the stock dividend is distributed. (Assume no other changes to equity.)

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Common stock-$10 par value, 150,000 shares authorized, 60,000 shares issued and outstanding.... $ 600,000 Paid-in capital in excess of par value, common stock. Retained earnings...... Total stockholders' equity 425,000 550,000 $1,575,000