There are several methods to account for stock dividends based on the actual type of dividend and terms of the dividend that are being declared. The reason why there are different ways to account for the dividends is because there are different actions surrounding dividends. When the dividend is declared, an entry is made for the declaration of the dividend, even though it is not yet paid. Most companies would record the declared dividend as a debit to retained earnings, and the credits would go to dividends ...
What about a stock dividend? How are stock dividends accounted for and why is there more than one accounting method for them?