Explain how to calculate the after stock dividend to enter on the balance sheet for the below.At the beginning of the year, the stockholders' equity section of the balance sheet of Solutions Corporation reflected the following:Common stock ($12 par value; 65,000 shares authorized, 30,000 shares outstanding) = $360,000Additional paid-capital = $120,000Retained earnings = $580,000On February 1, the board of directors declared a 60 percent stock dividend to be issued April 30. The market value of the stock on February 1 was $15 per share. The market value of the stock on April 30 was $18 per share.For comparative purposes, prepare the Stockholders’ Equity section of the balance sheet immediately before the stock dividend and immediately after the stock dividend.  Before Stock DividendAfter Stock DividendContributed capital:     Common stock$360,000     Additional paid-in capital120,000 Retained  earnings580,000 Total Stockholders equity1,060,000

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Asked Oct 31, 2019
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Explain how to calculate the after stock dividend to enter on the balance sheet for the below.

At the beginning of the year, the stockholders' equity section of the balance sheet of Solutions Corporation reflected the following:

Common stock ($12 par value; 65,000 shares authorized, 30,000 shares outstanding) = $360,000
Additional paid-capital = $120,000
Retained earnings = $580,000

On February 1, the board of directors declared a 60 percent stock dividend to be issued April 30. The market value of the stock on February 1 was $15 per share. The market value of the stock on April 30 was $18 per share.

For comparative purposes, prepare the Stockholders’ Equity section of the balance sheet immediately before the stock dividend and immediately after the stock dividend.

 

  Before Stock Dividend After Stock Dividend
Contributed capital:    
   Common stock $360,000  
    Additional paid-in capital 120,000  
Retained  earnings 580,000  
Total Stockholders equity 1,060,000  

 

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Effect of stock diviend: Decrease retained earnings by 30,000 shares x 60% x $15 market vahue per share -S270,000 Increase common stock by 30,000 shares x 60% x $12 par value per share =S216,000 Increase additional paid in capital by= 270,000-216,000 $54,000

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