Braco has 80,000 shares of $100 par value common stock outstanding, and 20,000 shares in the treasury.Braco is located in a state that allows dividends on treasury stock.The number of additional shares that would be issued in a 5% stock dividend is:
A)1,000
B)2,000
C)4,000
D)5,000

Question

Quizplus · Accepted Answer

A 5% stock dividend on 80,000 shares would result in 4,000 additional shares. However, since dividends are allowed on treasury stock, the 20,000 treasury shares are also considered, leading to a total of 100,000 shares (80,000 + 20,000). Therefore, 5% of 100,000 is 5,000 additional shares.

Braco Has 80,000 Shares of $100 Par Value Common Stock