Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $19.00 per share.

What would be the total stockholders' equity after a 13% common stock dividend?

Question

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $19.00 per share.

What would be the total stockholders' equity after a 13% common stock dividend?

Quizplus · Accepted Answer

First, we need to calculate the amount of the common stock dividend. 
Total common stock dividend = (13% x 45,000) = $5,850 
Then, we need to add the amount of the dividend to the total equity: 
Total stockholders' equity after the dividend = $45,000 + $45,000 + $135,000 + $5850 = $231,850 
Finally, we need to adjust the value of the common stock to reflect the stock dividend: 
Adjusted common stock value per share = $19 - (0.13 x $19) = $16.53 
Total number of common shares outstanding = $45,000 / $16.53 = 2,723.04 
Total stockholders' equity = $231,850 + ($16.53 x 2,723) = $806,017.22, which rounds to $806,000.

Gordon Corporation Reported the Following Equity Section on Its Current