The stockholders’ equity section of Jun Company’s balance sheet as of April 1 fo

Question

The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 20% stock dividend. The stock’s per share market value on April 2 is $15 (prior to the dividend).

    

   

Prepare the stockholders’ equity section immediately after the stock dividend.

Common Stock:

Paid-in capital in excess of par value, common stock:

Total paid-in capital:

Retained earnings:

Total stockholders' equity:

The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 20% stock dividend. The stock’s per share market value on April 2 is $15 (prior to the dividend).

Explanation / Answer

(50,000 shares) ($15 market value) = 750,000 decrease in retained earnings
50,000 shares x 5 par value = 250,000 increase in common stock issued and outstanding
difference = 500,000 increase in paid in capital in excess of par value, common stock

Stockholders' Equity April 2: Common stock—$5 par value, 475,000 shares authorized, 300,000 shares issued and outstanding: $1,500,000 Paid in capital in excess of par value, common stock: $1,090,000 Total paid-in capital: $2,590,000 Retained earnings: $133,000 Total stockholders' equity: $2,723,000

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