On December 31,2014,when the Conn Company's stock was selling at $36 per share,its capital accounts were as follows: Capital stock par value $20,100,000 shares issued)$2,000,000
Premium on capital stock 800,000
Retained Earnings 4,550,000
If a 100 percent stock dividend were declared and the par value per share remained at
$20

Question

Quizplus · Accepted Answer

With a 100 percent stock dividend, the number of shares would double from 2,000,000 to 4,000,000 (since each shareholder would receive one additional share for every share they currently own). However, the par value per share would remain at $20. Therefore, the capital stock would increase to $4,000,000 (4,000,000 shares x $20 par value per share), but no entry would need to be made to record the dividend since it is a stock dividend and does not involve a distribution of cash or other assets. The premium on capital stock and retained earnings accounts would also remain unchanged.

On December 31,2014,when the Conn Company's Stock Was Selling at $36