What happens from an accounting standpoint when FNB Bancorp issues a stock dividend?

FNB Bancorp recently declared a stock dividend, according to a recent news release[1]:

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FNB Bancorp (OTCQB: FNBG), the holding company for First National Bank of Northern California, announced that its Board of Directors has declared a stock dividend of approximately 210,709 shares, payable at the rate of one share of Common Stock for every twenty (20) shares of Common Stock owned. The stock dividend will be payable December 28, 2015, to shareholders of record on November 25, 2015. Fractional shares will be payable at the closing price on the record date of November 25, 2015.

According to FNB Bancorp’s 2014 Form 10-K, it had 3,978,505 shares of no par value common stock issued and outstanding as of December 31, 2014.

Questions

1. Assume a stockholder has 100 shares of FNB Bancorp common stock on November 25, 2015. How many shares of stock in total will the shareholder have after the stock dividend is distributed?
2. Assume a stockholder has 200 shares of FNB Bancorp common stock on October 1, 2015, and then purchases another 100 shares on November 30, 2015. How many shares of stock in total will the shareholder have after the stock dividend is distributed?
3. What journal entry, if any, will FNB Bancorp make to record the stock dividend?
4. If the stock price for one share of FNB Bancorp was $30.00 on November 25, 2015, how much cash would a shareholder who owned 50 shares of FNB Bancorp common stock on November 25, 2015, receive on December 28, 2015?

[1] Source: Market Wired, “FNB Bancorp Declares Stock Dividend,” October 23, 2015.
Instructor Resources

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• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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