Describe the accounting entry for a stock dividend, if any. Describe the accounting entry for a stock split, if any.

A stock dividend is an increase in the number of shares issued by a firm, with the new shares being distributed to current owners.

Existing shareholders are paid a pro-rata share of these new shares. These are usually paid infractions and per share.

When a corporation splits its stock, it raises the number of outstanding sharesto increase its liquidity.

Although the number of outstanding shares grows by a certain multiple, the share price falls in proportion to that multiple because the firm is not more valuable due to the split.

When a stock dividend is paid, an amount equal to the fair value of each share (if the dividend is less than 20-25 percent)or the par value of each share is transferred from retained earnings to paid-in capital (if the dividend is greater than 20-25 percent).

A stock split does not necessitate formal journal entries, but a remark in the ledger accounts to show that the par value of the shares has changed would be useful.