Mike's Motors has 220,000 shares of $6-par common stock outstanding. They have declared a 10% stock dividend. The current market price of the common stock is $14/share. The amount that will be credited to Common Stock on the date of declaration is:

Question

Quizplus · Accepted Answer

The amount credited to Common Stock is calculated based on the par value of the stock and the number of shares issued in the dividend. With a 10% stock dividend on 220,000 shares, 22,000 new shares are issued. At a $6 par value, the total credited to Common Stock is 22,000 shares * $6 = $132,000.

Mike's Motors Has 220,000 Shares of $6-Par Common Stock Outstanding