Question

Par value Is quity section of Heins E14.4 144 (LO1) On October 2 .000 and retained earnings $900.000 ber 31, the stockholders' equity section of Heins Company consists of common stained earnings $900,000. Heins is considering the following two courses of action dividend on the 50,000, S10 par value shares outstanding, or (2) effecting a will reduce par value to $5 per share. The current market price is $14 per share. Compa and a .000 ,000 ,000 000 000 ze from a declaring a 5 stock din 2.for-/ stock split that will Instructions Prepare a tabular sum aquity, outstanding share Wuler summary of the effects of the alternative actions on the components of stockholders ding shares, and par value per share. Use the following column headings: Before Action, Dividend, and After OCR reasury Stock Dividend, and After Stock Split. In 101) On October 1, Little Bobby Corporation's stockholders' equity is as follows. E14.5 (L01) On October 1. L 000 000 000 000 000 000 Common stock, $5 par value $400,000 Paid-in capital in excess of par-common stock 25,000 Retained earnings 155,000 Total stockholders' equity $580,000 On October 1, Little Bobby declares and distributes a 10% stock dividend when the market price of the stock is $15 per share. Instructions mpute the par value per share (1) before the stock dividend and (2) after the stock dividend. Indicate the balances in the three stockholders' equity accounts after the stock divia been distributed E14.6 (LO 1, 2) During 2020, Rob During 2020, Roblez Corporation had the following transactions and events.

Answer 1

a.1	Par Value before stock dividend	$5
a.2	Par Value after stock dividend	$5
	[($400,000*110%) / (80,000 shares*110%)]
b	Total amount of Dividend =80,000 shares*10%*$15 =$120,000
	Par value of Dividend =80,000 shares*10%*$5 =$40,000
	Excess paid in capital of Dividend =80,000 shares*10%*$10 =$80,000
	So the Journal entry for Stock dividend will be:
	Retained earnings	$120,000
	Common Stock		$40,000
	Paid-in capital in excess of Par value-Common Stock		$80,000
	On the basis of above entry the Stockholder's equity section after dividend shall be as follows:
	LITTLE BOBBY CORP.
	Stockholder's Equity
	Oct 1(after stock dividend)
	Common Stock	$    4,40,000
	Paid-in capital in excess of Par value-Common Stock	$    1,05,000
	Total Paid-in capital	$    5,45,000
	Retained earnings	$       35,000
	Total Stockholder's Equity	$    5,80,000