The equity section of Manning Company as of December 31, 2017 follows:
$$\begin{array} { | l | r | }
\hline \text { Camman stock (11,000 shares issued (? \$6 par) } & \$ 6 6 , 0 0 0 \
\hline \text { Additional paid-in capital (Comman stock) } & 100,000 \
\hline \text { Retained earnings } & 6 0 , 0 0 0 \
\hline \text { Less: Treasury stack (1,000 shares (@ \$12) } & ( 12,000 ) \
\hline \text { Total shareholders' equity } &\$ 2 1 4 , 0 0 0 \
\hline
\end{array}$$

The company declares a 12 percent stock dividend on the outstanding shares. The market price of the stock is $90. The journal entry to record the stock dividend would include:

Question

The equity section of Manning Company as of December 31, 2017 follows:
$$\begin{array} { | l | r | } 
\hline \text { Camman stock (11,000 shares issued (? \$6 par) } &  \$ 6 6 , 0 0 0  \
\hline \text { Additional paid-in capital (Comman stock) } & 100,000 \
\hline \text { Retained earnings } & 6 0 , 0 0 0 \
\hline \text { Less: Treasury stack (1,000 shares (@ \$12) } & ( 12,000 ) \
\hline \text { Total shareholders' equity } &\$ 2 1 4 , 0 0 0  \
\hline
\end{array}$$

The company declares a 12 percent stock dividend on the outstanding shares. The market price of the stock is $90. The journal entry to record the stock dividend would include:

Quizplus · Accepted Answer

The stock dividend is calculated on the outstanding shares (11,000 issued - 1,000 treasury = 10,000 outstanding). 12% of 10,000 shares is 1,200 shares. At a market price of $90, the total value is $108,000. The par value of the new shares is $7,200 (1,200 shares x $6 par), and the excess over par ($108,000 - $7,200 = $100,800) is credited to Additional Paid-In Capital.

The Equity Section of Manning Company as of December 31