Question

Beacon Corp. issued a 5% stock dividend on 30,000 shares of its $10 par common stock. At the time of the dividend, the market value pf the stock was $15 per share.

a). Compare the amount of the stock dividend

b). Show the effects of the stock dividend on the financial statements using a horizontal statements model like the following one.

Assets = Liab. + Com. Stk. + PIC in Excess + Ret. Earn. | Rev - Exp. = Net Inc. | Cash Flow

Answer 1

A :- amount of stock dividend =

= 30000 shares × 5% = 1500 shares

Value of shares = market value = $15 per share

Amount of stock dividend = 1500 × $15 = $22500

amount of stock dividend = $22500

Par value of shaares = 1500 × $10 = $15000

Paid in capital in excess of par value =

= $22500 - $15000 = $7500.

B. Effects of stock dividend on financial statements

Assets

=

Liabilities

+

common stock

+

paid in capital in excess of par value

+

retained earnings

revenue

-

expenses

=

net income

Cashflow

$15000

+

$7500

-

$22500

0

0

0

0

These are all the information required to solve the above given question

if there is any clarification required regarding the above provided answer, please mention them in comment box.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.