Josh's, Inc. has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $32 a share. The balance sheet shows $82,000 in the capital in excess of par account, $7,000 in the common stock account, and $64,800 in the retained earnings account. The firm just announced a 10 percent stock dividend. What is the value of the capital in excess of par account after the dividend?
Change in capital in excess of par = (7,000 shares × 0.10) × ($32 - $1) = $21,700
New capital in excess of par account balance = $82,000 + $21,700 = $103,700 |
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Randall's, Inc. has 20,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $12 per share. The balance sheet shows $42,000 in the capital in excess of par account, $20,000 in the common stock account, and $50,500 in the retained earnings account. The firm just announced a 5 percent (small) stock dividend. What will the balance in the retained earnings account be after the dividend?
Retained earnings = [(20,000 shares × 0.05) × $12 × -1] + $50,500 = $38,500
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Southern Fried Chicken has 8,000 shares of stock outstanding with a par value of $1 per share and a market value of $34 per share. The balance sheet shows $45,000 in the capital in excess of par account, $8,000 in the common stock account, and $152,000 in the retained earnings account. The firm just announced a 5 percent stock dividend. What will total owners' equity be after the dividend?
Total equity will not change as this is a small stock dividend.
Total equity = $45,000 + $8,000 + $152,000 = $205,000 |
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