The shareholders' equity accounts of Chatsworth Inc. have the following balances on December 31, 2014: Common shares,

Question:

The shareholders' equity accounts of Chatsworth Inc. have the following balances on December 31, 2014:

Common shares, 400,000 shares issued and outstanding .......................... $10,000,000

Contributed surplus .............................................................................................. 2,300,000

Retained earnings .................................................................................................. 42,400,000

Common shares are currently selling on the Prairie Stock Exchange at $59.

Instructions

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

(a) A stock dividend of 10% is declared and issued.

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

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...