Question

On June 30, 2015. Sharper Corporation's common stock is priced at $33.00 per share before any stock dividend or split, and the stockholders equlty section of its balance sheet appears as follows. Common stock-$8 par value, 85,000 shares authorized 34,000 shares issued and outstanding 272,000 oped 100,000 Paid-in capital in excess of par value, common stock 372,000 Retained earnings ook int 744,000 $ rint Total stockholders' equity rences Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock's par value. Answer these questions about stockholders' equity as it exists after issuing the new shares stockholders' equity and number of outstanding shares. (Amounts to be deducted should be indicated by o minus sign.) a.,b.& Complete the below table to calculate the retained earnings balance, total C.

Answer 1

Requirement 1:

Stock Dividends	Before Stock Dividend	Impact of Stock dividend	After Stock Dividend
Common stock	$272,000	$272,000	$544,000
Paid in capital in excess of par value	$100,000		$100,000
Total contributed capital	$372,000		$644,000
Retained earnings	$372,000	($272,000)	$100,000
Total stockholder's Equity	$744,000		$744,000
Number of common shares outstanding	34,000	34,000	68,000

Stock dividend = 34,000 x 100% = 34,000 shares

Requirement 2:

Stock split	Before Stock Dividend	Impact of Stock split	After Stock Dividend
Common stock	$272,000		$272,000
Paid in capital in excess of par value	$100,000		$100,000
Total contributed capital	$372,000		$372,000
Retained earnings	$372,000		$372,000
Total stockholder's Equity	$744,000		$744,000
Number of common shares outstanding	34,000	34,000	68,000

Shares after stock split = 34,000 x (2/1) = 68,000

Par value after stock split = $8/2 = $4