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12 November, 16:09

Allied Industries, Inc. has 250,000 shares of $7-par common stock outstanding. They've declared a 7% stock dividend. The current market price of the common stock is $11/share. What amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration?

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  1. 12 November, 17:18
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    Answer: $70,000

    Explanation:

    Given the following:

    Outstanding stock = 250,000

    Par value of common stock = $7

    Market price of common stock = $11

    Stock Dividend = 7% = 0.07

    Excess of par = $ (11 - 7) = $4

    Paid in capital in excess of par:

    Number of outstanding stock * excess par value * stock Dividend

    250,000 * $4 * 0.07 = $70,000

    Paid-in capital in excess of par = $70,000
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