Supreme Water Sports has 12,000 shares of $2 par common

Supreme Water Sports has 12,000 shares of $2 par common stock outstanding. Supreme distributes a 5% stock dividend when the market value of its stock is $22 per share.

Requirements

1. Journalize Supreme’s distribution of the stock dividend on August 31. An explanation is not required.

2. What is the overall effect of the stock dividend on Supreme’s total assets?

3. What is the overall effect on total stockholders’ equity?


Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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...