Question

QS 13-7 Accounting for small stock dividend LO P2 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 $15 (prior to the dividend). pints Common stock-$5 par value, 395,000 shares authorized, 210,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 1,050,000 510,000 843,000 $ 2,403,000 Total stockholders' equity Prepare the stockholders' equity section immediately after the stock dividend. Answer is complete but not entirely correct. JUN COMPANY Stockholders' Equity April 2 (after stock dividend) Common stock Paid-in capital in excess of par value, common stock Total paid-in capital Os 11,025 510,000 521,025 Retained earnings 843,000 0 $ 1,364,025 Total stockholders' equity

Answer 1

Total amount of Dividend =210,000 shares*10%*$15 =$315,000
Par value of Dividend =210,000 shares*10%*$5 =$105,000
Excess paid in capital of Dividend =210,000 shares*10%*$10 =$210,000
So the Journal entry for Stock dividend will be:
Retained earnings	$315,000
Common Stock		$105,000
Paid-in capital in excess of Par value-Common Stock		$210,000
On the basis of above entry the Stockholder's equity section after dividend shall be as follows:
JUN COMPANY
Stockholder's Equity
April 2(after stock dividend)
Common Stock	$1,115,000
Paid-in capital in excess of Par value-Common Stock	$720,000
Total Paid-in capital	$1,835,000
Retained earnings	$528,000
Total Stockholder's Equity	$2,363,000