Mandarin Company is authorized to issue 1,250,000 shares of $15 par value common stock. By November 15, 2019, the company had issued 60,000 shares at $36 per share. On November 15, 2019, the company declared a 50% stock dividend when the market price was $45 per share. What amount would be debited to the Stock Dividends account as a result of the stock dividend? Select one: a. 1,350,000 b. 450,000 c. 1,875,000 d. 900,000

Question

Eric Skinner

Business

6 June, 11:52

Mandarin Company is authorized to issue 1,250,000 shares of $15 par value common stock. By November 15, 2019, the company had issued 60,000 shares at $36 per share. On November 15, 2019, the company declared a 50% stock dividend when the market price was $45 per share. What amount would be debited to the Stock Dividends account as a result of the stock dividend? Select one: a. 1,350,000 b. 450,000 c. 1,875,000 d. 900,000

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Answers (1)

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Brylee Irwin · Answer 1

a. 1,350,000

Explanation:

The computation of the amount which is debited to the stock dividend account is shown below:

= Issued Number of shares * stock dividend percentage * market price

= 60,000 shares * 50% * $45

= $1,350,000

Simply we multiplied the issued number of shares with the stock dividend percentage and the market price so that the accurate amount can come.

All other information which is given is not relevant. Hence, ignored it