On June 30,2018,Ginger,Inc.showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | }
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; 202,000 shares authorized, } & \
150,000 \text { shares issued and outstanding } & \$ 150,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 260,000 \
\hline \text { Retained Earnings } & \$ 946,000 \
\hline \text { Total Stockholder's Equity } & \$ 1,356,000 \
\hline
\end{array}$$ On July 1,2018,the company declared and distributed a 9% stock dividend.The market value of the stock at that time was $20 per share.Following this transaction,what is the balance of Common Stock?
A) $163,500
B) $57,180
C) $285,540
D) $357,180

Question

On June 30,2018,Ginger,Inc.showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | } 
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; 202,000 shares authorized, } & \
150,000 \text { shares issued and outstanding } & \$ 150,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 260,000 \
\hline \text { Retained Earnings } & \$ 946,000 \
\hline \text { Total Stockholder's Equity } & \$ 1,356,000 \
\hline
\end{array}$$ On July 1,2018,the company declared and distributed a 9% stock dividend.The market value of the stock at that time was $20 per share.Following this transaction,what is the balance of Common Stock?
A) $163,500
B) $57,180
C) $285,540
D) $357,180

Quizplus · Accepted Answer

The balance of Common Stock after the stock dividend is calculated by adding the value of the new shares issued during the stock dividend to the original balance. With a 9% stock dividend on 150,000 shares, 13,500 new shares are issued (150,000 * 0.09). Since the par value is $1 per share, the value of these new shares is $13,500 (13,500 shares * $1). Adding this to the original balance of $150,000 gives a new balance of $163,500.

On June 30,2018,Ginger,Inc On July 1,2018,the Company Declared and Distributed a 9% Stock