Question

The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 20% stock dividend. The stock’s per share market value on April 2 is $15 (prior to the dividend).

    

	Common stock—$5 par value, 475,000 shares authorized, 250,000 shares issued and outstanding	$	1,250,000
	Paid-in capital in excess of par value, common stock		590,000
	Retained earnings		883,000
	Total stockholders' equity	$	2,723,000

   

Prepare the stockholders’ equity section immediately after the stock dividend. Common Stock: Paid-in capital in excess of par value, common stock: Total paid-in capital: Retained earnings: Total stockholders' equity:

Answer 1

Stockholder's Equity		Working
Common Stock	$1,500,000	[1250000 + 250000]
Paid in Capital in excess of Par Value Common Stock	$1,090,000	[590000 + 500000]
Total Paid in Capital	$2,590,000
Retained earnings	$133,000	[883000 - 750000]
Total Stockholder's Equity	$2,723,000

• Working

A	Shares outstanding	250,000
B	Stock Dividend rate	20%
C = A x B	Shares issued as Stock Dividend	50,000
D	Market price per share	$15
E = C x D	Total Stock Dividend	$750,000
F = C x $ 5 par	Common Stock increased by	$250,000
G = E - F	Paid in Capital in excess of Par Value Common Stock increased by	$500,000