A corporation declared and issued a 15% stock dividend on November 1.The following up-to-date information was available immediately prior to the dividend:
$$\begin{array} { | l | r | }
\hline \text { Retaired earnings } & \$ 750,000 \
\hline \text { Shares issued and outstanding } & 60,000 \
\hline \text { Market value per share } & \$ 15 \
\hline \text { Par value per share } & \$ 5 \
\hline
\end{array}$$
The amount that total stockholders' equity will increase (decrease)as a result of recording this stock dividend is:
A) $45,000
B) $135,000
C) $(90,000)
D) $(135,000)
E) $0

Question

A corporation declared and issued a 15% stock dividend on November 1.The following up-to-date information was available immediately prior to the dividend:
$$\begin{array} { | l | r | } 
\hline \text { Retaired earnings } & \$ 750,000 \
\hline \text { Shares issued and outstanding } & 60,000 \
\hline \text { Market value per share } & \$ 15 \
\hline \text { Par value per share } & \$ 5 \
\hline
\end{array}$$
The amount that total stockholders' equity will increase (decrease)as a result of recording this stock dividend is:
A) $45,000
B) $135,000
C) $(90,000)
D) $(135,000)
E) $0

Quizplus · Accepted Answer

A stock dividend does not change the total stockholders' equity; it only transfers an amount from retained earnings to common stock and additional paid-in capital.

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