The B. Spaniel Company has common stock with a $5 par value. 100,000 shares were authorized and 25,000 shares were issued. Common stock is currently selling at $13 per share. The number of shares of common stock authorized and issued after the distribution of a 15% common stock dividend is:

Question

Quizplus · Accepted Answer

After the distribution of a 15% common stock dividend, the number of shares will increase by 15% of the current outstanding shares. Therefore, the new number of authorized shares will be 115,000 (100,000 x 1.15) and the new number of issued shares will be 28,750 (25,000 x 1.15). Choice D is the only option that matches this calculation.

The B Spaniel Company Has Common Stock with a $5 Par