Hele 1 System Announcements Additional Brief Exercise 269 On November 1, 2015, N

Question

Hele 1 System Announcements Additional Brief Exercise 269 On November 1, 2015, Nate Corporation's stockholders' equity section is as follows: Common stock, $10 par value Paid-in capital in excess of par Retained earnings Total stockholders' equity $600,000 180,000 200,000 $980,000 On November 1, Nate declares and distributes a 15% stock dividend when the market value of the stock is $14 per share. Indicate the balances in the stockholders' equity accounts after the stock dividend has been distributed Common stock Paid-in Capital in Excess of Par Retained earnings Total stockholders' equity LINK TO TEXT Question At

Explanation / Answer

Note : A stock dividend is not a cash dividend ie it is issued by corporation to its shareholders without any consideration. When stock dividend is distributed an amount( stock dividend * fair value * number of shares) is transferred from Retained Earning to  Common stock & Paid in capital in excess of Par..

Balances in the stockholder's equity account after the stock dividend has been distributed

Titles Amount ($) Working (for understanding) Common Stock 690,000 $600,000 + (60000 * 15 % $10) Paid-in Capital in Excess of Par 216,000 $180,000 + [60000 * 15 %($14 - $10)] Retained Earnings 74,000 $200,000 - (60000 * 15 % $14) Total Stockholders’ Equity 980,000

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