Carla vista
has outstanding 200,000 common shares that were issued at $10 per share. The balances at January 1,2023, were $23 million in its
Retained Earnings account; $4.50 million in its Contributed Surplus account; and $1.20 million in its Accumulated Other Comprehensive Income account. During
2023, Carla vistas net income was $3,200,000 and comprehensive income was $3,450,000. A cash dividend of $0.60 per share was declared and paid on June 30 ,
2023, and a 5% stock dividend was declared at the fair value of the shares and distributed to shareholders of record at the close of business on December 31,
You have been asked to give advice on how to properly account for the stock dividend. The existing company shares are traded on a national stock
exchange. The shares' market price per share has been as follows:
Oct. 31, 2023
Nov. 30, 2023
$30
Dec. 31, 2023
39
Average price over the two-month period