The company with the common equity accounts shown here has declared a 10 percent
ID: 2799096 • Letter: T
Question
The company with the common equity accounts shown here has declared a 10 percent stock dividend when the market value of its stock is $32 per share.
What would be the number of shares outstanding, after the distribution of the stock dividend? (Do not round intermediate calculations.)
What would the equity accounts be after the stock dividend? (Do not round intermediate calculations.)
The company with the common equity accounts shown here has declared a 10 percent stock dividend when the market value of its stock is $32 per share.
Explanation / Answer
Shares outstanding increases by 10percent. so number of shares outstanding = 470000*(1.1) = 517,000
New shares issued = 517000 - 470000 = 47000
Since the par value of the new shares is $1, so additional capital surplus is = 47000 * 32 = $ 1,504,000
new equity balance :
Common Stock 517,000 Capital Surplus 2,367,000 Retained Earnings 2,386,800 Total owner's equity $5,270,800