Rocco Corporation decides to issue a 7.5% stock dividend on 20,000 outstanding shares of $10 stated value common stock.The distribution is made at the time the market value of the stock is $50 a share.How will the entry to record this transaction affect the company's stockholders' equity accounts?

Question

Quizplus · Accepted Answer

Number of shares issued = 20,000 Outstanding shares × Stock dividend of 7.5% = 1,500
Increase in Common stock = 1,500 Shares issued × Stated value of $10 per share = $15,000
Increase in Paid-in capital in excess of par value-common = 1,500 Shares issued × (Market value of $50 ? Stated value of $10) = $60,000
Decrease in Retained earnings = 1,500 shares issued × Market value of $50 per share = $75,000

Rocco Corporation Decides to Issue a 7