On December 31, the stockholders’ equity section of the balance sheet of R & B C

Question

On December 31, the stockholders’ equity section of the balance sheet of R & B Corporation reflected the following: Common stock (par $10; authorized 61,200 shares, outstanding 26,200 shares) $ 262,000 Additional paid-in capital 13,200 Retained earnings 81,000 On February 1 of the following year, a 12 percent stock dividend was issued. The market value of the stock on February 1 was $18 per share. Required: 1. For comparative purposes, prepare the stockholders’ equity section of the balance sheet (a) immediately before the stock dividend and (b) immediately after the stock dividend.

Explanation / Answer

Stockholders Equity Section Common Stock 262000 Additional Paid in Capital 13200 Retained Earnings 81000 Stockholders Equity 356200 After Stock Dividend Common Stock 262000 Stock dividend 31440 (262000*12%) Total 293440 Stockholders Equity Section Common Stock 293440 Additional Paid in Capital 13200 Retained Earnings 81000 Stockholders Equity 387640

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