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Provide and explain the missing closing entry

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Please help with the following problem.

Retained earnings at 1/1/06 was $150,000 and at 12/31/06 it was $200,000. During 2006, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You provide the missing closing entry.

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Solution Summary

This posting helps with journal entries in financial accounting and bookkeeping. The solution walks through the entries that have been made to arrive at amounts disclosed in the problem. Then the missing closing entry is given in summary form with explanations about the how and why of it.

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Problem: Retained earnings at 1/1/06 was $150,000 and at 12/31/06 it was $200,000. During 2006, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You provide the missing closing entry.

Solution:
First, the entries that have been made:

1. Debit Cash dividends $50,000
Credit Cash $50,000

2. There would NOT have ...

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