Douglas McDonald Company’s balance sheet included the following shareholders’ equity accounts at December 31, 2023:

On March 16, 2024, a 4% common stock dividend was declared and distributed. The market value of the common stock was $21 per share. Fractional share rights represented 2 million equivalent whole shares. Cash was paid in lieu of the fractional share rights.

Required:
1. What is a fractional share right?
2. Prepare the appropriate entries for the declaration and distribution of the stock dividend.

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Paid-in capital: Common stock, 900 million shares at $1 par Paid-in capital-excess of par Retained earnings Total shareholders' equity ($ in millions) $ 900 15,800 14,888 $31,588