Declaration and distribution of the stock dividend

Reference no: EM13129290

Douglas McDonald Company's balance sheet included the following shareholders' equity accounts at De- cember 31, 2005:
Paid-in capital ($ in millions)

Common stock, 900 million shares at $1 par: $ 900
Paid-in capital-excess of par 15,800
Retained earnings 14,888

Total shareholders' equity $31,588

On March 16, 2006, 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 place of the fractional share rights.

Required:

Prepare the appropriate entries for the declaration and distribution of the stock dividend.

Reference no: EM13129290

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