The stockholders' equity section of the balance sheet for Pokagon Corporation appeared as follows before its recent stock dividend: Common stock, $10 par, 10,000 shares issued and outstanding $ 100,000 Additional paid-in capital - common 120,000 Retained earnings 150,000 Total stockholders' equity $370,000 Pokagon declared a 10% stock dividend when the market price per share was $20. After the stock dividend was distributed, the components of the stockholders' equity section were:

Question

Julianna Andersen

Business

31 October, 16:04

The stockholders' equity section of the balance sheet for Pokagon Corporation appeared as follows before its recent stock dividend: Common stock, $10 par, 10,000 shares issued and outstanding $ 100,000 Additional paid-in capital - common 120,000 Retained earnings 150,000 Total stockholders' equity $370,000 Pokagon declared a 10% stock dividend when the market price per share was $20. After the stock dividend was distributed, the components of the stockholders' equity section were:

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Haven Ortega · Answer 1

Common stock = $110,000

Additional Paid in capital = $130,000

Retained earnings = $130,000

Explanation:

The computation of stockholders' equity is given below:

Common stock = Outstanding shares + (Stock dividend percentage * Shares issued * Par value per share)

= 100,000 + (10% * 10,000 * $10)

= $110,000

Additional Paid in capital = Additional paid-in capital - common + (Stock dividend percentage * Shares issued * (Market price per share - Par value per share))

= 120,000 + (10% * 10,000 * ($20 - $10))

= $130,000

Retained earnings = Retained earning (Given) - (Stock dividend percentage * Outstanding shares * Market price per share)

= 150,000 - (10% * 100,000 * $20)

= $130,000