On June 30, 2015, Sharper Corporation’s common stock is priced at $29.00 per sha
ID: 2467806 • Letter: O
Question
On June 30, 2015, Sharper Corporation’s common stock is priced at $29.00 per share before any stock dividend or split, and the stockholders’ equity section of its balance sheet appears as follows.
Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions about stockholders’ equity as it exists after issuing the new shares.
Complete the below table to calculate the retained earnings balance, total stockholders’ equity and number of outstanding shares.
On June 30, 2015, Sharper Corporation’s common stock is priced at $29.00 per share before any stock dividend or split, and the stockholders’ equity section of its balance sheet appears as follows.
Explanation / Answer
Total stock dividend = $128,000 (32,000 Shares at par Value)
a.) Retained Earning Balance = $228,000 - $128,000 (Stock Dividend) = $100,000
b.) Total Stockholder's Equity would remain unchanged
Common stock ($128,000 + $128,000) $256,000
Paid-in capital in excess of par value, common stock $100,000
Retained Earning ($228,000 - $128,000) $100,000
Total stockholders’ equity $456,000
c.) Number of outstanding shares = 32,000 + 32,000 = 64,000 Shares
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