51.7k views
0 votes
A corporation declared and issued a 20% stock dividend on October 1. The following information was available immediately prior to the dividend: Retained earnings $ 760,000 Shares issued and outstanding 61,000 Market value per share $ 16 Par value per share $ 5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

1 Answer

6 votes

Answer:

$195,200 increase

Step-by-step explanation:

The computation of the amount of the contributed capital increase or decrease is shown below:

Given that

Stock Dividend = Outstanding shares × 20%

= 61,000 Shares × 20%

= 12,200 shares

Now the Value of Stock Dividend is

= Number of Shares × Market Value per share

= 12,200 Shares × $16

= $195,200

There is an increase in the contributed capital

User Lance Hardwood
by
8.0k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.