On January 1, Edmiston Corporation had 2,000,000 shares of $10 par value common stock outstanding. On March 31 the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,
A)Edmiston's Paid-in Capital in Excess of Par Value account increased $1,000,000.
B)Edmiston's total stockholders' equity was unaffected.
C)Edmiston's Stock Dividends account increased $3,000,000.
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

The stock dividend increases the number of shares outstanding and reduces retained earnings by the market value of the shares issued. The par value of the shares remains the same, so there is no change to the Paid-in Capital in Excess of Par Value account. Total stockholders' equity is unaffected because the increase in shares outstanding is offset by the decrease in retained earnings.

On January 1, Edmiston Corporation Had 2,000,000 Shares of $10