Belkin Inc. has 107,000 shares of $3 par value common stock outstanding. Belkin declares a 47% stock dividend on March 2 when the stock's market value is $79 per share. Prepare the journal entry for declaration of the stock dividend

Answer and Explanation:

The journal entry is shown below:

Retained Earnings $150,870 (107,000 shares * 3 * 47%)

To Common stock dividend distributable $150,870

(Being the declaration of the stock dividend is recorded)

For recording this we debited the retained earning as it decreased the stockholder equity and credited the Common stock dividend distributable as it increased the liabilities so that the proper posting could be done