Question

The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 10% stock dividend. The stock’s per share market value on April 2 is $25 (prior to the dividend).

Common stock—$5 par value, 455,000 shares   

authorized, 240,000 shares issued and outstanding$1,200,000

Paid-in capital in excess of par value, common stock 570,000

Retained earnings 873,000

Total stockholders' equity$2,643,000

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

Answer 1

Stockholder's Equity
Common Stock [ (240000 + 24000) x $ 5 par]	$1,320,000
Paid in Capital in excess of Par Common Stock [570000 + 480000]	$1,050,000
Total Paid in Capital	$2,370,000
Retained earnings [$873000 - 600000]	$273,000
Total Stockholder's Equity	$2,643,000

--Workings

A	Shares outstanding prior to stock dividend	240,000
B	Stock dividend rate	10%
C = A x B	Shares issued as Stock Dividend	24,000
D	Market price per share	$25
E = C x D	Total Stock Dividend	$600,000
F = C x $ 5 par	Common Stock increased by	$120,000
G = E - F	Paid in Capital in excess of Par	$480,000