E$15\mathrm{.}13($ LO $3)($Stock Split and Stock Dividend$)$ The common stock of Alexander Hamilton Inc. is currently selling at $\backslash (\backslash$$ $120\backslash )$ per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $\backslash (\backslash$$ $10\backslash )$; book value is $\backslash (\backslash$$ $70\backslash )$ per share. Nine million shares are issued and outstanding.

Instructions

Prepare the necessary journal entries assuming the following.

a$.$ The board votes a $2-$for$-1$ stock split.

b$.$ The board votes a $\backslash (100\backslash \%\backslash )$ stock dividend.

c$.$ Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.

E$15\mathrm{.}14($LO $3)($Entries for Stock Dividends and Stock Splits$)$ The stockholders' equity accounts of G$.$K$.$ Chesterton Company have the following balances on December $31,2020.$

Shares of G$.$K$.$ Chesterton Company stock are currently selling on the Midwest Stock Exchange at $\backslash (\backslash$$ $37\backslash ).$

Instructions

Prepare the appropriate journal entries for each of the following cases.

a$.$ A stock dividend of $\backslash (5\backslash \%\backslash )$ is declared and issued.

b$.$ A stock dividend of $\backslash (100\backslash \%\backslash )$ is declared and issued.

c$.$ A $2-$for$-1$ stock split is declared and issued.