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29 April, 18:08

Josh's Inc. has 4,800 shares of stock outstanding with a par value of $1 per share and a market value of $19 a share. The balance sheet shows $149,000 in the capital in excess of par account, $4,800 in the common stock account, and $192,800 in the retained earnings account. The firm just announced a stock dividend of 10 percent. What is the value of the capital in excess of par account after the dividend?

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  1. 29 April, 18:12
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    The answer is $157,640

    Explanation:

    Capital in excess of par is the money an investor paid to obtain a company's equity in excess of the par value of the equity.

    Par value means face value

    Outstanding shares/stock = 4,800 shares

    Par value = $1 per share

    Market value = $19 per share

    Stock dividend = 10 percent or 0.10

    Change capital in excess of par = (4,800 shares x 0.10) x ($19 - $1)

    =480 x $18

    =$8,640

    New capital in excess of par = $149,000 + $8,640

    =$157,640
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