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For Questions 17 & 18 Assume there were 100,000 shares of Montage Co
For Questions 17 & 18 Assume there were 100,000 shares of Montage Co. common stock outstanding. 17. Montage Co. declared a 10% stock dividend when the market price per common share was $30, what amount would be transferred from Retained Earnings because of the stock dividend? Answer 18. How many dollars would be added to the common stock par value account as a result of the stock dividend?
Expert Solution
Any stock dividend declared by the company is to be reduced from the retained earnings amount . Therefore 10% stock dividend will be paid from the retained earnings
= 100,000*10%*30
= $300,000
18)
Assuming the par value is $10
Therefore amount to be added to the common stock par value will be the par value of the stock dividend
= 100,000*10%*10
= $100,000
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