Question

On January 1, Coronado Corporation had 960000 shares of $10 par value common stock outstanding. On March 31, the company declared a 25% stock dividend. Market value of the stock was $20/share. As a result of this event:_______

a. Key‘s Paid-in Capital in Excess of Par account increased $2,000,000
b. Key’s total stockholders‘ equity was unaffected.
c. Key‘s Stock Dividends account increased $6,000,000.
d. All of these answer choices are correct.

Answer 1

d. All of these answer choices are correct.

Step-by-step explanation:

Based on the information given as a result of this event their Paid-in Capital in Excess of Par account will increased with amount of $2,000,000 while their total stockholders‘ equity will be unaffected and lastly the Stock Dividends account will increased

by the amount of $6,000,000 which is calculated as :

Stock Dividends account=2,000,000 *.20*(25%*20+$10)

Stock Dividends account=2,000,000 *.20*$15

Stock Dividends account=$6,000,000