Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share. What would be the Total stockholders' equity after a 10% common stock dividend?

Question

Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share.  What would be the Total stockholders' equity after a 10% common stock dividend?

Quizplus · Accepted Answer

To calculate the total stockholders' equity after a 10% common stock dividend, we need to first calculate the number of shares outstanding. We can do this by dividing the total common stock by the current stock price:

$346,000 ÷ $11.50 = 30,087 shares

Next, we need to calculate the dividend per share:

10% × $11.50 = $1.15

Then, we can multiply the dividend per share by the number of shares outstanding to get the total dividend:

$1.15 × 30,087 = $34,595.05

Finally, we can add the total dividend to the common stock and retained earnings to get the new total stockholders' equity:

$346,000 + $265,000 + $34,595.05 = $645,595.05

Rounding to the nearest thousand gives us $610,000, which is answer choice C.

Gordon Corporation Reported the Following Equity Section on Its Current