Question

Superstar Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $ 14.75 per share.

Common​ Stock, $ 9.00 ​par, 127,000 shares​ authorized, 54,000 shares issued and outstanding $ 486,000
Paid in Capital in Excess of Par-Common 122,000
Retained Earnings 298,000
Total Stockholders' Equity $906,000

What would be the total stockholders' equity after a 15% common stock dividend?

Answer 1

$833,100

Step-by-step explanation:

Common Stock $486,000

Paid in Capital in excess of Par-Common Stocks $122,000

Retained Earnings($298,000-9*15%*54,000) $225,100

Total Stockholders' equity after 15% common

stock dividend $833,100

Dividend is always deducted from retained earnings therefore retained earnings have been reduced by $72,900 which is amount of dividend paid on common stocks.