Reference no: EM132418781

Problem: How do I prepare journal entries for date of declaration and date of distribution?

The stockholders' equity of Howell Company at July 31, 2018 is presented below:

Common stock, par value $20                                                          $3,600,000

Paid-in capital in excess of par - common stock                                    160,000

Retained earnings                                                                           10,650,000

Total Stockholders' Equity                                                            $14,410,000

On August 1, 2018, the board of directors of Howell declared a 15% stock dividend on common stock, to be distributed on September 15th. The market price of Howell's common stock was $64 on August 1, 2018. Prepare the journal entries for Howell for both the date of declaration and the date of distribution. Please provide the step by step solution of this problem.