The stockholders’ equity for Dairy King Drive-Ins (DK) on April 16, 2015, follows:Stockholders’ EquityCommon stock, $0.30 par, 2,600,000 shares authorized, 750,000 shares issued ……. $ 225,000 Paid-in capital in excess of par—common ……. 1,614,400 Retained earnings ………………. 7,154,000 Accumulated other comprehensive income (loss) .. (200,000)Total stockholders’ equity ………….$ 8,793,400On April 16, 2015, the market price of DK common stock was $20 per share. Assume DK declared and distributed a 15% stock dividend on this date.Requirements1. Journalize the declaration and distribution of the stock dividend.2. Prepare the stockholders’ equity section of the balance sheet after the stock dividend.3. Why is total stockholders’ equity unchanged by the stock dividend?4. Suppose DK had a cash balance of $610,000 on April 17, 2015. What is the maximum amount of cash dividends DK can declare?View Solution:
The stockholders equity for Dairy King Drive Ins DK on April

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