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Journal Entry to record Stock Dividend

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PharmGen, a pharmaceutical company, was founded two years ago. Like most pharmaceutical companies, PharmGen did not make any profits in its first two years of operations since the company spent heavily on research & Development to create new drugs. However, in order to continue to attract investors, the company would like to issue a 5% stock dividend this year.

PharmGen currently has 15,000 shares of common stock, and no preferred stock outstanding. The stock, which has a par value of $2.00, was initially issued at $12 per share. Currently, the stock is trading at $20 per share.

What journal entry must PharmGen use to record this 5% stock dividend?

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The solution provides Journal Entry to record Stock Dividend by given example.

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No. of share to be issued as Stock Dividend = 5% of 15000 = ...

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