Question

1. The stockholders' equity section of the balance sheet for Pokagon Corporation appeared as follows before its recent stock dividend:

Common stock, $10 par, 10,000 shares issued and outstanding	$ 100,000
Additional paid-in capital - common	120,000
Retained earnings	150,000
Total stockholders' equity	$370,000

Pokagon declared a 10% stock dividend when the market price per share was $20.

After the stock dividend was distributed, the components of the stockholders' equity section were:

Select one:

A.

Common Stock	Additional Paid-in Capital	Retained Earnings
$100,000	$130,000	$170,000

B.

Common Stock	Additional Paid-in Capital	Retained Earnings
$100,000	$130,000	$130,000

C.

Common Stock	Additional Paid-in Capital	Retained Earnings
$110,000	$130,000	$130,000

D. There would be no change in the components of stockholders' equity.

2. The following selected list of accounts with their normal balances was taken from the general ledger of Wallace Company as of December 31, 2016:

Common stock, $1 par Wallace	$ 380,000
Retained earnings	262,000
Paid-in capital in excess of par - preferred	70,000
Treasury Stock	330,000
Preferred stock, $100 par	600,000
Paid-in capital in excess of par -common	760,000

Given above information, at the end of 2016:

Select one:

A. Total Paid in Capital is $2,140,000, and Total Stockholders' equity is $2,402,000

B. Total Paid in Capital is $1,480,000, and Total Stockholders' equity is $1,742,000

C. Total Paid in Capital is $1,480,000, and Total Stockholders' equity is $1,218,000

D. Total Paid in Capital is $1,810,000, and Total Stockholders' equity is $1,742,000

Answer 1

	SOLUTION : 1
		10% stock dividend = 10,000 shares X 10% =	1,000 Shares
		Market Value of the per shares =	$                              20
		Value of the stock dividend = 10,000 Shares X $ 20 =	$                      20,000
		Entry of above will be paased as below,
		Retained Earnings                                                                   Debit	$                      20,000
		Common Stock                                                                Credit	$                      10,000
		Addittional paid in capital in excess of par         Credit	$                      10,000
	As per above answer =
	Answer = Option C =
		Common Stock	$                  1,10,000
		Addittional paid in capital	$                  1,30,000
		Retained Earnigs	$                  1,30,000
	SOLUTION : 2
		Total Paid in Capital :
		Common stock, $1 par Wallace	$                  3,80,000
		Paid-in capital in excess of par -common	$                      70,000
		Preferred stock, $100 par	$                  6,00,000
		Paid-in capital in excess of par - preferred	$                  7,60,000
		Total Paid in Capital :	$                18,10,000
		Add:
		Retained Earnings	$                  2,62,000
		Less: Treasurry Stock	$                -3,30,000
		Total Stockholder's Equity	$                17,42,000
	Answer =	Option D =
		Total Paid in Capital is $ 1,810,000 and Total Stockholder's Equity is $ 1,742,000