Stock Dividends – Journal Entry To Record Stock Dividend Issued

Stock dividends are a type of dividend but instead of giving stockholders cash they are given common stock in the company. Dividends are similar to draws for a sole proprietor or partnership but there are some differences. Draws can differ from partner to partner and the partner generally has more say as to how much they would like to draw from the partnership. A dividend needs to be standardized, giving an equal amount to each share of stock. A stock dividend will result in a debit to retained earnings for the value of the dividend, the amount of shares times the market price, a credit to common stock for the par value with is the number of shares times the par value, and a credit to additional paid in capital for the amount the fair market value exceeds the par value. For more accounting information see website.…


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