Question

January 1, Edison Corporation had 1,000,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 20% stock dividend. Market value of the stock was $18/share. As a result of this event,A. Edison's Paid-in Capital in Excess of Par account increased $1,600,000.B. Edison's total stockholders' equity was unaffected.C. Edison's Stock Dividends account increased $3,600,000.D. All of these answers are correct.

Answer 1

D All of these answers are correct.

Step-by-step explanation:

Given that the corporation had 1,000,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 20% stock dividend. Market value of the stock was $18/share. As a result of this event

Paid-in Capital in Excess of Par = 1000000*20%*(18-10) = 1600000

Stock dividend = 1000000*20%*18= 3600000

Edison's total stockholders' equity was unaffected because increase in Stock dividend leads to decrease in retained earnings by the same amount.

Answer is option D All of these answers are correct.