On June 30,2018,Chris Brothers,Inc.showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | }
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; 197,000 shares authorized, } & \
146,000 \text { shares issued and outstanding } & \$ 146,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 271,000 \
\hline \text { Retained Earnings } & \$ 941,000 \
\hline \text { Total Stockholder's Equity } & \$ 1,358,000 \
\hline
\end{array}$$ 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?
A) $227,640
B) $523,160
C) $271,000
D) $457,880

Question

On June 30,2018,Chris Brothers,Inc.showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | } 
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; 197,000 shares authorized, } & \
146,000 \text { shares issued and outstanding } & \$ 146,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 271,000 \
\hline \text { Retained Earnings } & \$ 941,000 \
\hline \text { Total Stockholder's Equity } & \$ 1,358,000 \
\hline
\end{array}$$ 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?
A) $227,640
B) $523,160
C) $271,000
D) $457,880

Quizplus · Accepted Answer

The balance of Paid-In Capital in Excess of Par-Common after the stock dividend is calculated by first determining the number of shares distributed as the dividend (8% of 146,000 shares = 11,680 shares). The value of these shares at the market price is $17 * 11,680 = $198,560. Since each share has a par value of $1, the total par value of the new shares is $11,680. The excess of the market value over the par value ($198,560 - $11,680 = $186,880) is added to the Paid-In Capital in Excess of Par, making the new balance $271,000 + $186,880 = $457,880.

On June 30,2018,Chris Brothers,Inc On July 1,2018,the Company Declared and Distributed a 8% Stock