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CH13 Graded Written Homework Problem 1 In some cases, companies elect to pay dividends to stockholders in the form of additio
On February 1, the market price of Cheerios, Inc.s common stock was $9 per share. On February 16, the market price of Cheeri
Cheerios, Inc. had issued stock only one time before the stock dividend described earlier, al price of 57 per share. Cheerios
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Answer #1

Here's the table showing computation for stock dividend and appropriate journal entries:

Number of shares before stock dividend Stock dividend % on oustanding shares Number of shares Stock dividend in after stock s

Here's the table showing stock holder equity balance before and after stock dividend (Only grey shaded column is answer to this question and other columns are provided for easy understanding)

Balance before stock dividend Number of shares Price per share Total 2.00 650,000.00 Common stock Paid in capital excess of pCherios pay for treasury stock $4 per share (i.e.) $ 60000 divided by 15000 shares (325000 issued shares minus 310000 outstanding shares)

Distribution of stock dividend does not have any impact on asset side of balance sheet. Infact total liabilities will not affect, because it denotes the profit being shared to stockholders in the form of shares and only the number of outstanding shares will change. Common stock and paid in capital value increase and corresponding decrease exists in retained earnings. No other change in total assets and total liabilities.

If Tom Red owned 12,400 shares, after stock dividend Red would own 13,392 shares, which represents same 4% of the new total shares outstanding (since corresponding increase exists in total outstanding shares as well, no change exists per shareholder). Here's the table:

Number of shares Stock dividend % before stock on oustanding dividend shares Number of shares Stock dividend in after stock s

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