Question

On January 1, Metlock, Inc. had 680000 shares of $10 par value common stock outstanding. On March 31 the company declared a 15% stock dividend. Market value of the stock was $20/share. As a result of this event,

A.Metlock’s Paid-in Capital in Excess of Par Value account increased $1020000.

B.Metlock’s total stockholders’ equity was unaffected.

C.Metlock’s Stock Dividends account increased $2040000.

D.All of these answer choices are correct.

Answer 1

Stock Dividend Declared = 680000 x 15% x $20

The journal entry to record Stock Dividend Declared:

Date	General Journal	Debit	Credit
Mar 31	Stock Dividend (680000 x 15% x $20)	2,040,000
	Stock Dividend distributable		$1,020,000
	Paid-in capital in excess of par		$1,020,000
	(Record Stock Dividend Declared)

Common Stock Distributable = (680000 x 15% x $10 ) = $1,020,000

Paid-in capital in excess of par = $2,040,000 - $1,020,000
                                                  = $1,020,000

here, Stock Dividends account increased $2040000 , Paid-in capital in excess of par is $1,020,000
and there is no effect on total stockholders’ equity        

Therefore, all optionsThe correct Option is D . (all option is correct)