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Murphy's, Inc., has 85,000 shares of stock outstanding with a par value of $1 per share. The market value is $12 per share. The balance sheet shows $74,500 in the capital in excess of par account, $85,000 in the common stock account, and $141,500 in the retained earnings account. The firm just announced a stock dividend of 11 percent. What will the balance in the capital in excess of par account be after the dividend

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  1. Today, 03:28
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    The correct answer is $177,955.

    Explanation:

    According to the scenario, the computation of the given data are as follows:

    Capital in excess of par account = $74,500

    Common stock = $85,000

    Retained earning = $141,500

    So, we can calculate the balance in the capital in excess of par account be after the dividend by using following formula:

    Capital after Dividend = Balance sheet amount of Capital + (Issued additional share * Capital in excess of par per share)

    Where,

    Issued additional share = 11% * $85,500 = 9,405

    And Capital in excess of par per share = $12 - $1 = $11

    By putting the value, we get

    Capital after dividend = $74,500 + (9,405 * $11)

    = $74,500 + $103,455

    = $177,955
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