On January 1, McCarver Corporation had 600,000 shares of $10 par value common stock outstanding. On March 31 the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,
A) McCarver's Paid-in Capital in Excess of Par Value account increased $300,000.
B) McCarver's total stockholders' equity was unaffected.
C) McCarver's Stock Dividends account increased $900,000.
D) All of these answer choices are correct.

Question

Quizplus · Accepted Answer

A stock dividend increases the common stock and paid-in capital accounts but does not affect total stockholders' equity. The stock dividend is valued at market price, so the Stock Dividends account increases by $900,000 (600,000 shares * 10% * $15). The Paid-in Capital in Excess of Par Value increases by $300,000 (600,000 shares * 10% * ($15 - $10)).

On January 1, McCarver Corporation Had 600,000 Shares of $10