Coolmatt Travel Ltd. is authorized to issue 500,000 common shares. As of December 31, 2019, the company had issued 70,000 shares at $7.50 per share and its Retained Earnings balance was $255,000. 

During 2020, the following transactions took place: Jun. 10 Declared a 10 percent stock dividend using the market value of $4.00 per share.

Jul. 20 Distributed the stock dividend.

Aug. 5 Declared a $0.45 per share cash dividend. Date of record is August 21.

Sep. 15 Paid the cash dividend declared on August 5.

Required

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

2. Journalize the declaration and payment of the cash dividend.

3. Prepare the shareholders’ equity section of the balance sheet on August 5, 2020.