Question

How do I come up with the common stock? (1) (2) After After Stock Stock Dividend...

How do I come up with the common stock?
(1) (2)
After After
Stock Stock
Dividend Split
Stockholders' equity:
Common stock, $2 par ,         200,000 shares issued and outstanding
Common stock, $1 par , shares issued and outstanding
Additional paid-in capital         660,000
Retained earnings         775,000
Total stockholders' equity $   1,635,000
Business   Accounting   
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Answer #1

In case of Stock Split

Common stock before stock split is

100,000 shares of $2 par - $200,000

After stock split - Number of shares will be 200,000 and par value will be $1 per share

200,000 shares of $1 par - $200,000

In case of Stock Dividend

The number of shares will increase, but the par value will remain the same at $2 per share.

The amount of shares issued as stock dividend will decrease from Retianed earnings, hence the total stockholders equity will remain the same at $1,635,000.

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