Morgan's has 9,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $9 per share. The balance sheet shows $9,000 in the common stock account, $21,000 in the capital in excess of par account, and $40,500 in the retained earnings account. The firm just announced a 100 percent (large) stock dividend. What is the value of the common stock account after the dividend?

Question

Quizplus · Accepted Answer

A 100 percent stock dividend means the number of shares will double, so the new total shares will be 18,000. Since the par value is $1.00 per share, the value of the common stock account after the dividend will be 18,000 shares * $1.00 per share = $18,000.

Morgan's Has 9,000 Shares of Stock Outstanding with a Par