On June 30, 2013, Stephans Company showed the following data on the equity section of their balance sheet:
$\begin{array}{|l|r|r|}
\hline \text { Stockholders' equity } & & \
\hline \text { Common stock, } \$ 1 \text { par } & 100,000 \text { shares authorized } &\$40,000 \
\hline & 40,000 \text { shares issued } & \
\hline \text { Paid-in capital in excess of par } & & 260,000 \
\hline \text { Retained earnings } & & 940,000 \
\hline \text { Total stockholder's equity } & & \$ 1,240,000 \
\hline
\end{array}$

On July 1, 2013, Stephans distributed a 5% stock dividend. The market value of the stock at that time was $13 per share.
-Following this transaction, what would be the new balance in the Common stock account?

Question

On June 30, 2013, Stephans Company showed the following data on the equity section of their balance sheet:
$\begin{array}{|l|r|r|}
\hline \text { Stockholders' equity } & & \
\hline \text { Common stock, } \$ 1 \text { par } & 100,000 \text { shares authorized } &\$40,000 \
\hline & 40,000 \text { shares issued } & \
\hline \text { Paid-in capital in excess of par } & & 260,000 \
\hline \text { Retained earnings } & & 940,000 \
\hline \text { Total stockholder's equity } & & \$ 1,240,000 \
\hline
\end{array}$

On July 1, 2013, Stephans distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. 
-Following this transaction, what would be the new balance in the Common stock account?

Quizplus · Accepted Answer

A 5% stock dividend on 40,000 shares is 2,000 additional shares. At $1 par value, the common stock account increases by $2,000, resulting in a new balance of $42,000.

On June 30, 2013, Stephans Company Showed the Following Data