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 (300,000 shares authorized), $100 par, $10,000,000; Paid-In Capital in excess of par— common stock, $2,000,000; and Retained earnings, $45,000,000. The board of directors declared a 2% stock dividend when the market price of the stock was $125 a share. Organic Health Co. reported no income or loss for the current year. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.

Please read the following announcement.

https://www.askmehelpdesk.com/finance-accounting/announcement-font-color-ff0000-u-b-read-first-expectations-homework-help-board-b-u-font.html

I will help you with this if you will do your part by working with me. Is there something specific you don't understand? Do you understand what a stock dividend is?

I do understand what a stock dividend is just not sure where to start with this journal entry.

Well, let's start with the amount of the stock dividend. Do you know how to compute the number of shares involved?

I figured out the problem. Thank you for your help.

You did it on your own. Thanks for letting me know. :)