Solution 1:
Particulars | Before stock dividend | Adjustment | After stock dividend |
Contributed capital: | |||
Common shares | $250,000.00 | $54,000.00 | $304,000.00 |
Contributed surplus | $12,000.00 | $0.00 | $12,000.00 |
Total contributed capital | $262,000.00 | $54,000.00 | $316,000.00 |
Retained earnings | $75,000.00 | -$54,000.00 | $21,000.00 |
Total shareholder's equity | $337,000.00 | $0.00 | $337,000.00 |
Solution 2:
True, statement regarding declaration of stock dividend is:
1. Total assets will not change
2. Total liabilities will not change
3. Retained earnings will be reduced by the amount of dividend
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