A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend:
$\begin{array}{llr}
\text { Retained earnings} &\$750,000\
\text { Shares issued and outstanding } &60,000\
\text { Market value per share} &\$15\
\text { Par value per share } &\$5\
\end{array}$

The amount that contributed capital will increase (decrease)as a result of recording this stock dividend is:
A) $45,000.
B) $135,000.
C) $(45,000).
D) $(135,000).
E) $0.

Question

A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend:
$\begin{array}{llr}
  \text {  Retained earnings} &\$750,000\
 \text { Shares issued and outstanding } &60,000\
 \text {  Market value per share} &\$15\
 \text { Par value per share } &\$5\
\end{array}$

The amount that contributed capital will increase (decrease)as a result of recording this stock dividend is:
A) $45,000.
B) $135,000.
C) $(45,000).
D) $(135,000).
E) $0.

Quizplus · Accepted Answer

A 15% stock dividend on 60,000 shares results in 9,000 additional shares (60,000 * 0.15). The increase in contributed capital is calculated using the market value per share: 9,000 shares * $15 = $135,000.

A Corporation Declared and Issued a 15% Stock Dividend on October