5. value 2.00 points At the beginning of the year, the stockholders\' equity sec
ID: 2568307 • Letter: 5
Question
5. value 2.00 points At the beginning of the year, the stockholders' equity section of the balance sheet of Solutions Corporation reflected the following: Common stock ($13 par value; 66,000 shares authorized, 35,000 shares outstanding) Additional paid-in capital Retained earnings 455,000 22,000 742,000 On February 1, the board of directors declared a 70 percent stock dividend to be issued April 30. The market value of the stock on February 1 was $16 per share. The market value of the stock on April 30 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. SOLUTIONS CORPORATION Balance Sheet (Partial) At February 1, This Year Stockholders' Equity Before Stock Dividend After Stock Dividend Contributed Capital: Common stock Additional pad-in capital Retained eanings Total stockholders' equityExplanation / Answer
STOCKHOLDER'S EQUITY SECTION Before Stock Dividend After Stock Dividend Contributed Capital Common Stock $ 4,55,000.00 $ 7,73,500.00 Additonal Paid in Capital $ 1,22,000.00 $ 1,95,500.00 Retaiened Earning $ 7,42,000.00 $ 3,50,000.00 Total Shareholder's Equity $ 13,19,000.00 $ 13,19,000.00 70% of Stoc kis Dividend = 70% of $ 455,000= $ 3,18,500.00 No. of Shares Par Value $ 13 $ 24,500.00 Date for dicvidend will be declared date taken Market Price as on Feb - 01 = $ 16 Par Value = $ 3,18,500.00 Premium on Shares = 24,500 Shares * $ 3 = $ 73,500.00 Total value of Stock dividend 3,92,000.00 Retained earning = $ 7,42,000.00 Less : Stock Dividend Par Value $ 3,18,500.00 Premium $ 73,500.00 New Retaiend Earning = $ 3,50,000
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