Question

Chapter 14 - Dividends and Dividend Policy Saved The company with the common equity accounts shown here has declared a 13 percent stock dividend at a time when the market value of its stock is $53 per share. $410,000 Common stock (51 par value) Capital surplus Skipped 1,573,000 3,866,000 Retained earnings Total owners' equity $5,849,000 Show the new equity account balances after the stock dividend distribution. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g.. 32.) Common stock Capital surplus surplus Retained earnings Total owners' equity

Answer 1

Ans: Stock dividend = 13 %

Stock dividend in terms of shares = 13% * 410,000

= $ 53,300.

capital surplus for new shares = ($53-$1) * 53,300 share ($1*53,300 is included in common stock remaining will be shown here)

= $ 52 * 53,300

= $ 2,771,600

New capital surplus = $ 1,573,000 + $ 2,771,600

= $ 4,344,600.

New common stock = $ 410,000 + $ 53,300

= $ 463,300

New retained earnings = $ 3,866,000 - $ 2,824,900.

= $ 1,041,100

Particulars	Amount($)
Common stock	463300
capital surplus	4344600
Retained earnings	1041100
Total owners equity	5849000