Question

The stockholders' equity for Heavenly Desserts Drive-Ins (HD) on July 16, 2015, follows:

On July 16, 2015, he market price of HD common stock was $17 per share. Assume HD declared and distributed a 25% stock dividend on this date.

1) Journalize the declaration and distribution of the 25% stock dividend. (Record debits first, then credits. Exclude explanations from any journal entries.)

2) Prepare the stockholders' equity section of the balance sheet after the stock dividend.