On October 1, 2020, the board of directors of Tecumseh Corporation declared a 30% stock dividend. On

Question:

On October 1, 2020, the board of directors of Tecumseh Corporation declared a 30% stock dividend. On the declaration date, there were 55,000 common shares issued and outstanding. The fair market value of the shares on October 1, 2020, was $125 per share. The stock dividend was distributed on October 31, 2020, to shareholders of record on October 15, 2020.

Required

a. Prepare the journal entries required to record the stock dividend.

b. What is the market price of the shares after the stock dividend if the market reacts as expected?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

Fantastic news! We've Found the answer you've been seeking!