Exercise 14-5 (Part level Submission) (a) LINK TO TEXT SAVE FOR LATER SUBMIT ANS
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Exercise 14-5 (Part level Submission)
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Exercise 14-5 (Part level Submission)
On October 1, Little Bobby Corporation’s stockholders’ equity is as follows.Common stock, $6 par value $509,400 Paid-in capital in excess of par—common stock 22,560 Retained earnings 158,360 Total stockholders’ equity $690,320
On October 1, Little Bobby declares and distributes a 10% stock dividend when the market price of the stock is $14 per share.
Explanation / Answer
Total common stock outstanding = $509400 / $6 = 84900 shares 10% stock dividend = 84900 * 10% = 8490 shares After issue of stock dividend , the par value of share will remain same at $6 per share. The retained earning will be reduced to the extent of issue of stock dividend i.e. by $50940 (8490 * $6) Answer a Par value before the stock dividend $6 Par value after the stock dividend $6 Answer b Bobby Corporation’s stockholders’ equity after issue of stock dividend Common stock,$6 par value 93390 shares issued and paid up $5,60,340 Paid-in capital in excess of par—common stock $22,560 Retained earnings $1,07,420 Total stockholders’ equity $6,90,320
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