Bruno's has 6,000 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 $6,000 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 common stock account after the dividend?

Question

Quizplus · Accepted Answer

A 50% stock dividend means that shareholders will receive an additional 50% of their current shares of stock. In this case, Bruno's will issue 3,000 additional shares of stock (50% of 6,000). After the dividend, there will be a total of 9,000 shares outstanding (6,000 + 3,000).

To find the new value of the common stock account, we need to divide the total par value of the stock (now $9,000, since there are 9,000 shares outstanding) by the par value per share ($1).

$9,000 / $1 = $9,000

Therefore, the value of the common stock account after the dividend will be $9,000, which is answer choice C.

Bruno's Has 6,000 Shares of Stock Outstanding with a Par