Question

The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 20% stock dividend. The stock’s per share market value on April 2 is $10 (prior to the dividend).

QS 13-7 Accounting for small stock dividend LO P2 The stockholders' equity section of Jun Company's balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 20% stock dividend. The stock's per share market value on April 2 is $10 (prior to the dividend). Common stock-$5 par value, 555,00 shares authorized, 290,e00 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 1,450,000 670,00a 923,000 $ 3,043,000 Prepare the stockholders' equity section immediately after the stock dividend. JUN COMPANY Stockholders' Equity April 2 (after stock dividend) Common stock Paid-in capital in excess of par value, common stock Total paid-in capital Retained earnings Total stockholders' equity

Answer 1

Stock dividend will not effect the stockholders equity balance it only decreses the retained eamings and increase in paid in capital by an equal amount. Stock Dividend is = (290000*10%)-29,000 shares Stockholders Equity section after stock dividend: Particulars Common Stock, $5 Par value, 555,000 shares authorized, 348,000 (290000t(2900002096) shares issued and outstanding Paid in capital in excess of par value common stock (670000+(58000*5)) Retained earnings (923000-(58000 10)) Total Stockholders Equity Amount $ 17,40,000 9,60,000 3,43,000 30,43,000