Textbook Problem

Augusta Corporation reported the following information: 35,000 shares of $3 par value common stock authorized, 30,000 shares common stock issued, 10,000 shares treasury stock.

Required:

1. What is the appropriate journal entry to record a 5% stock dividend if the market price of the common stock is S40 per share when the dividend is declared?
2. What is the appropriate journal entry to record a 20% stock dividend if the market price of the common stock is S40 per share when the dividend is declared?
3. CONCEPTUAL CONNECTION How do these transactions affect Augusta’s total stockholders equity?