Question

In: Accounting

Stockholders' equity of Ziyech Corporation is as follows: Common stock, $20 par; issued and outstanding 90,000...

Stockholders' equity of Ziyech Corporation is as follows:

Common stock, $20 par; issued and outstanding 90,000 shares: $1,800,000

Paid-in capital – excess of par: $900,000

Retained earnings: $760,000

      

The current market price of Ziyech’s stock is $37 per share. If Ziyech declares and distributes a 20% stock dividend, paid-in capital – excess of par balance will be:

Multiple Choice

  • $1,566,000

  • $1,206,000

  • $1,260,000

  • $900,000

Solutions

Expert Solution

Correct answer----------------$1,206,000

Working

Value of Stock Dividend $            666,000
Less: Par value of shares (18000 x 20) $            360,000
Amount to be credited to paid-in capital – excess of par $            306,000
Add: Current balance $            900,000
Updated balance after dividend issue (306000+900000) $        1,206,000

.

Shares Outstanding 90000
Stock Dividend % 20%
New shares to be issued 18000
Market value per share $                37.00
Value of Stock Dividend $      666,000.00

ekkarill92 answered 1 year ago
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