Question

# Beacon Corp. issued a 5% stock dividend on 30,000 shares of its \$10 par common stock....

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

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

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