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24 March, 01:01

Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30% stock dividend. The market value was $50 per share, the par value was $10, and the average issue price was $30 per share. By what amount will Universe decrease shareholders' equity for the dividend?

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  1. 24 March, 04:20
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    The amount of $0 will decrease the shareholders equity for the dividend.

    Explanation:

    Stock Dividend is the kind of dividend in which the payment of dividend done in the form of additional or extra shares instead of a cash payout.

    So, when the stock dividend is declared, then the portion of the retained earnings is re - classified as the contributed capital.

    Therefore, the net effect on the aggregate equity will be $0.
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Home » Business » Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30% stock dividend. The market value was $50 per share, the par value was $10, and the average issue price was $30 per share.
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