On December 31, the stockholders’ equity section of the balance sheet of R & B C
ID: 2508617 • Letter: O
Question
On December 31, the stockholders’ equity section of the balance sheet of R & B Corporation reflected the following:
On December 31, the stockholders' equity section of the balance sheet of R & B Corporation reflected the following Common stock (par $10; authorized 62,000 shares, outstanding 27,000 shares) Additional paid-in capital Retained earnings $270,000 14,000 85,000 On February 1 of the following year, a 12 percent stock dividend was issued. The market value of the stock on February 1 was $18 per share Required 1. For comparative purposes, prepare the stockholders' equity section of the balance sheet (a) immediately before the stock dividend and (b) immediately after the stock dividend Stockholders' Equity Before Stock After Stock Stock Dividend Dividend Contributed Capital $ 270,000 32,400302,400 Common Stock Additional Paid-In Capital, Common Stock Retained Earnings 14,000 Total Contributed Capital 284,000 32,400 302,400 Total Stockholders' Equity 2. If the stock dividend were 100%, would the balance in additional paid-in capital change? Yes 0 NoExplanation / Answer
Answer
Common Stock in number of shares
27000
shares outstanding
Dividend 12% [27000 x 12%]
3240
shares
Dividend stock at par $10
$32,400
[3240 x $10]
Dividend shares in cash excess of par
$25,920
[3240 x $(18-10)]
Before Stock Dividend
Stock Dividend
After Stock Dividend
Contributed Capital:
Common Stock
270000
32400
302400
Additional paid in Capital
14000
25920
39920
Retained Earnings
85000
-58320
26680
Total Contributed Capital
$369,000
$0
$369,000
NO, that would be a case of LARGE STOCK DIVIDEND, and then market value isnot considered and hence, additional paid in capital would not change by the difference between market price and par value.
Common Stock in number of shares
27000
shares outstanding
Dividend 12% [27000 x 12%]
3240
shares
Dividend stock at par $10
$32,400
[3240 x $10]
Dividend shares in cash excess of par
$25,920
[3240 x $(18-10)]
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