The stockholders’ equity account for Paper Manufacturers is shown below. The firm’s common stock has a current market price of $20 per share.               Preferred stock                                                               $100,000             Common stock (120,000 shares at $4 par)                    $480,000             Paid-in capital in excess of par                                   $1,920,000             Retained earnings                                                           $360,000                         Total stockholders’ equity                              $2,860,000   How will the stockholders’ equity account changes if Paper Manufacturers pays a 5% stock dividend? How will the stockholders’ equity account changes if Paper Manufactures pays (1) a 10% and (2) a 15% stock dividend? What are the effects of stock dividends on stockholders’ equity?

College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter20: Corporations: Organization And Capital Stock
Section: Chapter Questions
Problem 5SEA: STOCKHOLDERS EQUITY SECTION After closing its books on December 31, Pro Parts stockholders equity...
icon
Related questions
Question

The stockholders’ equity account for Paper Manufacturers is shown below. The firm’s common stock has a current market price of $20 per share.

 

            Preferred stock                                                               $100,000

            Common stock (120,000 shares at $4 par)                    $480,000

            Paid-in capital in excess of par                                   $1,920,000

            Retained earnings                                                           $360,000

                        Total stockholders’ equity                              $2,860,000

 

  1. How will the stockholders’ equity account changes if Paper Manufacturers pays a 5% stock dividend?
  2. How will the stockholders’ equity account changes if Paper Manufactures pays (1) a 10% and (2) a 15% stock dividend?
  3. What are the effects of stock dividends on stockholders’ equity?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Dividends
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
College Accounting, Chapters 1-27 (New in Account…
College Accounting, Chapters 1-27 (New in Account…
Accounting
ISBN:
9781305666160
Author:
James A. Heintz, Robert W. Parry
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning