Ask Question
14 December, 08:28

A corporation declared and issued a 10% stock dividend on October 1. The following information was available immediately prior to the dividend: Retained earnings $ 830,000 Shares issued and outstanding 68,000 Market value per share $ 23 Par value per share $ 5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

+5
Answers (1)
  1. 14 December, 09:58
    0
    The share capital will increase by $34000

    Explanation:

    dividend declared is in stock (10% of existing holding)

    Share capital = 68,000 shares. dividend = 10% of 68,000 = 6,800

    Par value of share is $5 per unit. Thus share capital increase is $5 x 6,800 = $32,000

    share premium (23-5) = $18 per share. Thus share premium reserve will increase by 18 x 6,800 = $122,400

    share premium is the difference between market value and par value of shares.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A corporation declared and issued a 10% stock dividend on October 1. The following information was available immediately prior to the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers