A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend: $\begin{array} { l }
\text {Retained earnings }&\$750,000 \
\text { Shares issued and outstanding}&60,000 \
\text {Market value per share }&\$15 \
\text { Par value per share}& \$5\
\end{array}$
The amount that contributed capital will increase (decrease)as a result of recording this stock dividend is:

Question

A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend: $\begin{array} { l  }
 \text {Retained earnings }&\$750,000 \
 \text { Shares issued and outstanding}&60,000 \
 \text {Market value per share }&\$15 \
 \text {  Par value per share}& \$5\
\end{array}$
 The amount that contributed capital will increase (decrease)as a result of recording this stock dividend is:

Quizplus · Accepted Answer

The stock dividend is 15% of 60,000 shares, which is 9,000 shares. The market value per share is $15, so the total market value of the dividend is 9,000 shares x $15 = $135,000. This amount is transferred from retained earnings to contributed capital, increasing contributed capital by $135,000.

A Corporation Declared and Issued a 15% Stock Dividend on October