stock dividend will affect retained earnings, paid in capital in excess of par, common stock.
here,
5% stock dividend is declared.
=>10,000*5% =>500 shares.
since market price is $33 per share.
retained earnings will reduce by ($33*500 shares)=>$16,500.
common shares will increase by ($3*500 shares)=>$1,500.
paid in capital in excess of par will increase by ($30*500 shares) =>$15,000.
Preferred stock will not be affected.
a.
preferred stock after 5% stock dividend | 110,000 |
common stock after 5% stock dividend (10,500 shares*$3) | 31,500 |
paid in capital in excess of par (300,000+15,000) | 315,000 |
retained earnings (100000-16,500) | 83,500 |
total stock holders equity | 540,000 |
b.
Stock dividend does not affect the total stockholders equity.
This can be said since the total stock holders equity remains the same even after stock dividend.
Stock dividend-Firm Columbia Paper has the following stockholders equity account The firm's common stock has a...
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