Superstar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.00 per share. What would be the total stockholders' equity after a 15% common stock dividend?

Question

Superstar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.00 per share.  What would be the total stockholders' equity after a 15% common stock dividend?

Quizplus · Accepted Answer

To calculate the total stockholders' equity after a 15% common stock dividend, we first need to calculate the amount of dividend to be paid:

- Common stock dividend = 15% x 100,000 shares x $12 per share = $180,000

The dividend will reduce retained earnings and increase common stock:

- Retained earnings = $493,000 - $180,000 = $313,000
- Common stock = $400,000 + $180,000 = $580,000

Finally, we can calculate the total stockholders' equity as the sum of retained earnings and common stock:

- Total stockholders' equity = $313,000 + $580,000 = $893,000

Therefore, the correct answer is C.

Superstar Corporation Reported the Following Equity Section on Its Current