On January 1 Ecuyer Corporation had 1600000 shares of $10 par value common stock outstanding. On March 31 the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event

Question

Quizplus · Accepted Answer

A stock dividend increases the common stock and paid-in capital in excess of par accounts but does not affect total stockholders' equity. The stock dividend is calculated as 15% of 1,600,000 shares, which is 240,000 shares. The increase in common stock is 240,000 shares x $10 par value = $2,400,000. The increase in paid-in capital in excess of par is 240,000 shares x ($15 market value - $10 par value) = $1,200,000. The stock dividends account increases by 240,000 shares x $15 market value = $3,600,000. Thus, all statements are correct.

On January 1 Ecuyer Corporation Had 1600000 Shares of $10