A. Stock dividend = 1% of Paid up capital of $700,000 = $7,000

B. Journal entry for accounting stock dividend:

Dr Retained earnings .... $7,000

Cr Common Stock ............ ............ $5,035.97 ----- (7,000/$139 * $100 = $5,035.97 )

Cr Paid-In Capital in excess of par .. $1,964.03 ----- (7,000/$139 * $39 =$1,964.03)

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Here is my problem:

Organic Health Co. is an HMO for businesses in the Chicago area. The following account balances appear on the balance sheet of Organic Health Co.: Common stock (390,000 shares authorized), $100 par, $700,000; Paid-In Capital in excess of par― common stock, $210,000; and Retained earnings, $6,300,000. The board of directors declared a 1% stock dividend when the market price of the stock was $139 a share. Organic Health Co. reported no income or loss for the current year.

Any help would be greatly appreciated!