Caesar Corporation has 280,000 shares of $9-par common stock outstanding. They have declared a 8% stock dividend. The current market price of the common stock is $14/share. The amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration is:

Question

Quizplus · Accepted Answer

First, we need to calculate the number of shares to be issued as a stock dividend:
280,000 shares x 8% = 22,400 shares

The par value of the additional shares to be issued is $9 x 22,400 shares = $201,600.

Next, we need to calculate the market value of the additional shares:
22,400 shares x $14/share = $313,600.

The difference between the market value and par value is the amount that will be recorded in Paid-in Capital in Excess of Par Common Stock:
$313,600 - $201,600 = $112,000.

Caesar Corporation Has 280,000 Shares of $9-Par Common Stock Outstanding