Declared a 2% stock dividend on common stock and a $1.80 cash dividend per share on preferred stock. On the date of declaration, the market value of the common stock was $55 per share. On the date of record, 120,000 shares of common stock had been issued, 9,500 shares of treasury common stock were held, and 22,500 shares of preferred stock had been issued.

I already have

Cash Dividend 40500
Cash Dividend Payable 40500
Stock Dividend
Stock Dividend Distribut
PIC of common stock
However I'm having issues finding the numbers for the stock dividend entries
I've tried 120000*55*.02=132000 as Stock dividend distrib

If someone could please point me in the right direction it would be greatly appreciated.

The cash dividend is fine.

As for the stock dividend, let's go over a few ideas.

• Dividends are done on shares outstanding. Outstanding shares are issued shares that are not held by the company. Treasury shares are those held by the company. So how many are outstanding?
• A stock dividend means instead of giving out cash to the stockholders, you are giving them extra shares.
• Thinking about that last statement... even if 120,000 shares were outstanding (which they aren't), those are the ones already issued. We do not need market price for those -- they aren't giving out another 120,000 shares at market price. So no reason to multiply that.
• The percent given is the extra shares they will give. So there will be 2% more shares given on the outstanding shares. How many new shares are we giving out?
• The entry will seem a bit confusing at first. The market value is what we use for the Stock Dividend account. (Kind of like the cash dividend account except we separate it into stock dividend.) That's because that is the value of what we are giving. The distributable account will be replaced by the common stock account once the shares are actually given. That means it has to be AT PAR, just like any new issuance of stock. Any difference between those is the PIC account, again just like any new issuance of stock. Note the dollar amounts for the entry are exactly like the way you would do a regular issuance of stock -- there's just some difference in the accounts.

Give it another try and see how you do.

Oh, reading it again, I see they give no par value on the common stock. Does it not have one or did you leave it out? If it doesn't have one, lump the entire thing into the distributable and forget what I said about the PIC account. The dollar amounts are still like a new issuance of stock, because that's exactly what you're doing - it just hasn't been distributed yet.