Samuel's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share. The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account and $32,500 in the retained earnings account. The firm just announced a 50% (large) stock dividend. What is the value of the capital in excess of par account after the dividend?

Question

Quizplus · Accepted Answer

In a large stock dividend, the par value is transferred from retained earnings to common stock, and the capital in excess of par remains unchanged. Thus, the capital in excess of par account remains $58,000.

Samuel's Has 7,000 Shares of Stock Outstanding with a Par