I don't understand from where did you got $2000 in Credit- Common stock? Its wrong, it should be 1000 not 2000

For Smaller rate (<25%)

Its' Debit side Dividends: 100 x 30= 3000 (retained earnings )

Credit side: Common stock distributable: 100 x 10= 1000$

Paid in capital in excess of par= $2000

Now for Distribute date::

Debit: 1000 $ and credit : $1000 is right.

For LARGE:

Declare: 1000 x 40%= 400 x 10= 4000$ (Debit )

Credit : Will be the same = $4000 (common stock distributable )

Distribute: Debit: $4000

Credit : $4000

I just don't understand where the $2000 Common Stock and $1000 Paid in Capital came from, also don't understand where the 4000 Stock dividend and 4000 Common stock came from, thanks :)

Problem:

Assume 1,000 shares are outstanding: $10par, $30market.

Declare and Distribute a 10% stock dividend.

Declare and Distribute a 40% stock dividend.

Small- 1000x10%=100x30=$3000

Declare- DR Stock dividends-$3000

CR Common Stock- $2000

CR Additional Paid in Capital- $1000

Distribute- DR Common Stock Dis- $1000

Cr Common Stock- $1000

Large- 1000x40%=400x10=$4000

Declare- DR Stock Dividend- $4000

CR Common Stock- $4000

Distribute- DR Common Stock Dist

CR Common Stock- $4000