Concin has the following equity accounts on its balance sheet: $\begin{array}{lr}
\text { Common stock ( } \$ 0.25 \text { par, } 9 \text { million shares) } & \$ 2,250,000 \
\text { Contributed capital in excess of par } & 89,400,000 \
\text { Retain earnings } & 67,503,189 \
&\$159,153,189
\end{array}$ ? The current market price for a share of Concin's stock is $24.25. If the firm declares a 10% stock dividend and a $0.06 per share cash dividend, what will be the impact on Common stock on the above equity account?
A) No change
B) Increase of $225,000
C) Increase of $54,000
D) Increase of $21,600,000

Question

Quizplus · Accepted Answer

A 10% stock dividend on 9 million shares means 900,000 new shares will be issued. At $0.25 par value, this increases the Common stock account by $225,000 (900,000 shares x $0.25).

Concin Has the Following Equity Accounts on Its Balance Sheet