On October 1, Kosko Corporation’s stockholders’ equity is as follows.
|
Common stock, $5 par value |
$400,000 |
|
Paid in capital in excess of par value |
25,000 |
|
Retained earnings |
155,000 |
|
Total stockholders’ equity |
$580,000 |
On October 1, Kosko declares and distributes a 10% stock dividend when the market value of the stock is $15 per share.
Instructions
(a) Compute the par value per share (1) before the stock dividend and (2) after the stock dividend.
(b) Indicate the balances in the three stockholders’ equity accounts after the stock dividend shares have been distributed.
E14 6 During 2010, Jester Corporation had the following transactions and events.
1. Declared a cash dividend.
2. Issued par value common stock for cash at par value.
3. Completed a 2 for 1 stock split in which $10 par value stock was changed to $5 par value stock.
4. Declared a small stock dividend when the market value was higher than par value.
5. Made a prior period adjustment for overstatement of net income.
6. Issued the shares of common stock required by the stock dividend declaration in item no. 4 above.
7. Paid the cash dividend in item no. 1 above.
8. Issued par value common stock for cash above par value.
Instructions
Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders’ equity.
Present your answer in tabular form with the following columns. Use (I) for increase, (D) for decrease, and (NE) for no effect. Item no. 1 is given as an example.
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Paid in Capital |
|||
|
Capital |
Retained |
||
|
Item |
Stock |
Additional |
Earnings |
|
1 |
NE |
NE |
D |