Weygandt, Accounting Principles, 12e ACCOUNTING PRINCIPLES (AC 1101/1201/3 Assig

Question

Weygandt, Accounting Principles, 12e ACCOUNTING PRINCIPLES (AC 1101/1201/3 Assignment Gradebook ORION Downloadable eTextbook MESSAGE HY INSTRUCTOR FULL SCREEN PRINTER VERSION BACK Brief Exercise 14-4 Your answer is partially correct. Try again The stockholders' equity section of Pretzer Corporation consists of common stock ($10 par) $1,800,000 and retained earnings $515,000. A 10% stock dividend (18,000 shares) is declared when the market price per share is $14, show the before anearter enes or the amoee the folñowing (a) The components of stockholders' equity (b) Shares outstanding (c) Par value per share. Before Dividend After Dividenc s' equity Outstanding shares Par value per share

Explanation / Answer

Stock dividends issued do not increase or decrease the share holders equity. As there is no actual distributions of assets from the company and, therefore, not a liability when declared; represents only transfer of capital from retained earnings to contributed capital.

Before dividend After dividend Stock holders equity 2,315,000 (1,800,000+515,000) 2,315,000 Outstanding shares 180,000 (1,800,000/10) 198,000 [180,000+(180,000*10%)] Par value per share 10 10

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