On June 30, 2018, Chris Brothers, Inc. showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | }
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; } 197,000 \text { shares authorized, } & \
146,000 \text { shares issued and outstanding } & \$ 146,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 271,000 \
\hline \text { Retained Earnings } & \$ 941,000 \
\hline \text { Total Stockholders' Equity } & \$ 1,358,000 \
\hline
\end{array}$$ On July 1, 2018, the company declared and distributed a 8% stock dividend. The market value of the stock at that time was $17 per share. Following this transaction, what is the balance of Paid-In Capital in Excess of Par-Common?

Question

On June 30, 2018, Chris Brothers, Inc. showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | } 
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; } 197,000 \text { shares authorized, } & \
146,000 \text { shares issued and outstanding } & \$ 146,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 271,000 \
\hline \text { Retained Earnings } & \$ 941,000 \
\hline \text { Total Stockholders' Equity } & \$ 1,358,000 \
\hline
\end{array}$$ On July 1, 2018, the company declared and distributed a 8% stock dividend. The market value of the stock at that time was $17 per share. Following this transaction, what is the balance of Paid-In Capital in Excess of Par-Common?

Quizplus · Accepted Answer

The stock dividend involves issuing additional shares to existing shareholders, which affects the Paid-In Capital in Excess of Par-Common. With an 8% stock dividend on 146,000 shares, the company issues 11,680 additional shares (146,000 * 0.08). The value of these shares at the market price is $198,560 (11,680 shares * $17). However, only the amount in excess of the par value ($1 per share) is added to Paid-In Capital in Excess of Par-Common. Thus, $16 per share for 11,680 shares equals $186,880. Adding this to the existing balance of $271,000 gives a new total of $457,880.

On June 30, 2018, Chris Brothers, Inc On July 1, 2018, the Company Declared and Distributed a Data