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On June 30, Sharper Corporation’s stockholders' equity section of its balance sheet appears as follows before...

On June 30, Sharper Corporation’s stockholders' equity section of its balance sheet appears as follows before any stock dividend or split. Sharper declares and immediately distributes a 50% stock dividend. Common stock—$10 par value, 120,000 shares authorized, 78,000 shares issued and outstanding $ 780,000 Paid-in capital in excess of par value, common stock 340,000 Retained earnings 730,000 Total stockholders’ equity $ 1,850,000 Required: (1) Prepare the updated stockholders' equity section after the distribution is made. (2) Compute the number of shares outstanding after the distribution is made.

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Answer #1
Stockholder's equity
Before After
Common Stock-78000 shares outstanding 780000 1170000 (780000+390000)
Paid in capital-in excess of par 340000 340000
Retained earnings 730000 340000 (730000-390000)
Total stock holder equity 18,50,000 1850000
Number of shares outstanding 78000 117000 (78000+39000)
Par value of share 10 10
Note:
Shares given as stock dividend:
Shares outstanding 78000
Multiply: Dividend % 50%
Shares given as stock dividend: 39000
Multiply: Par value 10
Amount of stock dividend 390000
(debited to Retained earnings and credited to Common Stock)
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