Question
In: Accounting
On June 30, Sharper Corporation’s stockholders' equity section of its balance sheet appears as follows before...
On June 30, Sharper Corporation’s stockholders' equity section of
its balance sheet appears as follows before any stock dividend or
split. Sharper declares and immediately distributes a 50% stock
dividend.
| Common stock—$10 par value, 120,000 shares authorized, 52,000 shares issued and outstanding | $ | 520,000 | |
| Paid-in capital in excess of par value, common stock | 210,000 | ||
| Retained earnings | 665,000 | ||
| Total stockholders’ equity | $ | 1,395,000 | |
Exercise 13-6 Large stock dividend LO P2
Required:
(1) Prepare the updated stockholders' equity section after the
distribution is made.
(2) Compute the number of shares outstanding after the distribution
is made.
Solutions
Expert Solution
1.
Number of shares outstanding before stock dividend = 52,000
Stock dividend = 50%
Number of shares issued in stock dividend = Number of shares outstanding before stock dividend x Stock dividend percentage
= 52,000 x 50%
= 26,000
In case of large stock dividend, par value of shares is considered.
After stock dividend, retained earnings will decrease by = Number of shares issued in stock dividend x Par value of 1 share
= 26,000 x 10
= $260,000
After stock dividend, common stock will increase by = Number of shares issued in stock dividend x Par value of 1 share
= 26,000 x 10
= $260,000
| Common stock—$10 par value, 120,000 shares authorized, 78,000 shares issued and outstanding | $ | 780,000 | |
| Paid-in capital in excess of par value, common stock | 210,000 | ||
| Retained earnings | 405,000 | ||
| Total stockholders’ equity | $ | 1,395,000 |
2.
Number of shares outstanding after stock dividend = Number of shares outstanding before stock dividend + Number of shares issued in stock dividend
= 52,000 + 26,000
= 78,000
ekkarill92 answered 2 years agoRelated Solutions
On June 30, Sharper Corporation’s stockholders' equity section of its balance sheet appears as follows before...
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2019
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1.
Calculate the number of shares
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