The company with the common equity accounts shown here has declared a 14 percent stock dividend...
Question:
The company with the common equity accounts shown here has declared a 14 percent stock dividend at a time when the market value of its stock is $47 per share.
Common stock ($1 par value) $ 420,000
Capital surplus 1,550,000
Retained earnings 3,868,000
Total owners' equity $ 5,838,000
Required: Show the new equity account balances after the stock dividend distribution.
Stock Dividend:
Stock dividend means issuing shares of the company for free to the existing shareholders in proportion of their existing shareholding. It doesn't involve any inflow or outflow of cash. Basically, it is just capitalisation of retained earnings.
Answer and Explanation: 1
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View this answerNumber of shares before stock dividend= Book Value of common stock/Par Value = $420,000/$1 = 420,000
Stock dividend = 14% of 420,000 = 58,800
- Value...
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What Are Stock Dividends & Stock Splits?
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Chapter 16 / Lesson 7
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Dividends are the company's payments to shareholders, and stock splits are where an individual share can be divided, making it more affordable. See how corporations manage stocks regarding ownership, dividends, capital gains, and stock splits.
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