Allied Industries, Inc. has 250,000 shares of $7-par common stock outstanding. They've declared a 7% stock dividend. The current market price of the common stock is $11/share. What amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration?

Question

America Frazier

Business

14 September, 10:58

Allied Industries, Inc. has 250,000 shares of $7-par common stock outstanding. They've declared a 7% stock dividend. The current market price of the common stock is $11/share. What amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration?

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Answers (1)

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Jane Browning · Answer 1

Answer: $70,000

Explanation:

Given the following:

Outstanding stock = 250,000

Par value of common stock = $7

Market price of common stock = $11

Stock Dividend = 7% = 0.07

Excess of par = $ (11 - 7) = $4

Paid in capital in excess of par:

Number of outstanding stock * excess par value * stock Dividend

250,000 * $4 * 0.07 = $70,000

Paid-in capital in excess of par = $70,000