The Matt Tress Sofa Company has 11,000 shares of $2 par common stock outstanding. On August 22, 2019, a 3% stock dividend was declared to be distributed on September 30, 2019. The market value of the stock on August 22 was $21; the market value on September 30 was $18. What is the amount to be credited to the Common Stock account on September 30?

Question

Quizplus · Accepted Answer

The amount to be credited to the Common Stock account is calculated based on the par value of the stock and the number of new shares issued as a result of the stock dividend. With a 3% stock dividend on 11,000 shares, 330 new shares are issued (11,000 * 3%). Since the par value is $2, the amount credited to the Common Stock account is 330 shares * $2 = $660.

The Matt Tress Sofa Company Has 11,000 Shares of $2