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Stock Dividend and Stock Splits

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PharmGen, a pharmaeutical company, was founded two years ago. Like most pharmaceutical companies. PharmaGen did not make any profits inits 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 initally 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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Solution Summary

The solution provides journal entry to record 5% stock dividend for PharmGen.

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Share to be issued in stock dividend = 15000*5% = 750 ...

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