Superstar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.00 per share. $$\begin{array} { | l | r | }
\hline \begin{array} { l }
\text { Common Stock, } \$ 10 \text { Par, } 103,000 \text { shares authorized, } 58,000 \text { shares issued } \
\text { and outstanding }
\end{array} & \$ 580,000 \
\hline \text { Paid-in Capital in Excess of Par-Common } & 125,000 \
\hline \text { Retained Earnings } & 302,000 \
\hline \text { Total Stockholders' Equity } & \$ 1,007,000 \
\hline
\end{array}$$ What would be the total stockholders' equity after a 15% common stock dividend?

Question

Superstar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.00 per share. $$\begin{array} { | l | r | } 
\hline \begin{array} { l } 
\text { Common Stock, } \$ 10 \text { Par, } 103,000 \text { shares authorized, } 58,000 \text { shares issued } \
\text { and outstanding }
\end{array} & \$ 580,000 \
\hline \text { Paid-in Capital in Excess of Par-Common } & 125,000 \
\hline \text { Retained Earnings } & 302,000 \
\hline \text { Total Stockholders' Equity } & \$ 1,007,000 \
\hline
\end{array}$$ What would be the total stockholders' equity after a 15% common stock dividend?

Quizplus · Accepted Answer

First, we need to calculate the number of shares outstanding:

Common stock / Par value per share = Number of shares outstanding 
$300,000 / $10 = 30,000 shares

After a 15% stock dividend, we need to multiply the number of shares outstanding by 1.15 to get the new number of shares:

30,000 x 1.15 = 34,500 shares

The new value of the common stock section is:

34,500 shares x $12 per share = $414,000

Adding the other equity sections:

$414,000 + $450,000 + $143,000 = $1,007,000

Therefore, the total stockholders' equity after a 15% common stock dividend is $1,007,000, which is choice C.

Superstar Corporation Reported the Following Equity Section on Its Current