Question

d On December 31, 2016, the shareholders' equity section of the balance sheet of R&L Corporation reflected the following: Common shares (no-par value; authorized 60.000 shares, outstanding 25,000 shares) Contributed surplus Retained earnings $250,000 12.000 75,000 Skipped On February 1, 2017, the board of directors declared a 12 percent stock dividend to be issued on April 30, 2017. The market value of the shares on February 1, 2017, was $18 per share. Required: 1. For comparative purposes, prepare the shareholders' equity section of the balance sheet() immediately before the stock dividend and() immediately after the stock dividend. (Amounts to be deducted should be indicated with a minus sign.) References Shareholders' Equity Before Stock Dividend Adjustment After Stock Dividend Contributed capital Total contributed capital 0 0 0 Total shareholders' equity 5 05 0 5 0

Answer 1

1]		Shareholders' Equity
		Before Stock Dividend	Adjustment	After Stock Adjustment
	Contributed capital:
	Common shares	$         2,50,000	$        30,000	$     2,80,000
	Contributed surplus	$            12,000	$        24,000	$ 36,000
	Total contributed capital	$         2,62,000	$        54,000	$     3,16,000
	Total shareholders' equity
	Retained earnings	$            75,000	$      -54,000	$ 21,000
	Total shareholders' equity	$         3,37,000	$                 -	$     3,37,000
2]	Which of the following statements are true…....................stock dividend?
	*Total assets will not change
	*Total liabilities will not change
	*Retained earnings will be reduced by the amount of dividend