The stockholders\' equity section of the balance sheet for Pental, Inc., follows
ID: 2497743 • Letter: T
Question
The stockholders' equity section of the balance sheet for Pental, Inc., follows before the stock dividend. Common stock, $1 par, 100,000 shares issued and outstanding $100,000
Additional paid-in capital 50,000
Retained earnings 450,000
Total stockholders' equity $600,000
Pental, Inc., declared a 5% stock dividend when the market price per share was $10.
Required: Determine the amounts of each account after the stock dividend was distributed.
Common stock
Additional paid-in capital
Retained earnings
Explanation / Answer
Pental, Inc., declared a 5% stock dividend when the market price per share was $10.
The amounts of each account after the stock dividend was distributed:
Common stock = $100,000 * 5% = $105,000
Additional paid-in capital = $50,000 + [5000 * ($10- $1)] = $95,000
Retained earnings = $450,000 - (5000 * $10) = $400,000
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