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Homework answers / question archive / The stockholders' equity section of Sheffield Corporation consists of common stock ($10 par) $2,650,000 and retained earnings $532,000

The stockholders' equity section of Sheffield Corporation consists of common stock ($10 par) $2,650,000 and retained earnings $532,000

Accounting

The stockholders' equity section of Sheffield Corporation consists of common stock ($10 par) $2,650,000 and retained earnings $532,000. A 10% stock dividend (26,500 shares) is declared when the market price per share is $14. Show the before-and-after effects of the dividend on the following. (a) (b) (c) The components of stockholders' equity. Shares outstanding. Par value per share. Before Dividend After Dividend Stockholders' equity $ $ Outstanding shares Par value per share $ $ Click if you would like to Show Work for this question: Open Show Work

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Before Dividend After Dividend
Stockholders' Equity

$3,182,000

[Refer working note 1]

$3,182,000

[Refer working note 1]
Shares Outstanding

265,000

[Common stock total par value / Par value per common share]

[$2,650,000 / $10]

291,500

[Shares outstanding before stock dividend + Stock dividend share]

[265,000 + 26,500]
Par value per share

$10

[Mentioned in the question]

$10

[Stock dividend do not change par value per share]

.

.

Working note 1
  Before stock dividend After stock dividend
Common stock (including additional paid in capital)                             (a) $2,650,000

$3,021,000

[Refer working note 2]
Retained Earnings                                                                                    (b) $532,000

$161,000

[Refer working note 4]
Total Stockholders' Equity                                                                    (a + b) $3,182,000 $3,182,000

.

.

Working note 2 - Calculation of common stock (Common stock includes additional paid in capital)
Common Stock                                                            (Before stock dividend) $2,650,000
Add: Stock dividend                                                    [Refer working note 3] $371,000
Common stock                                                              (After stock dividend)                      $3,021,000

.

.

Working note 3 - Calculation of stock dividend
Number of shares issued as stock dividend                   (a) 26,500
Market value per share                                                  (b) $14
Stock dividend                                                              (a x b) $371,000

.

.

Working note 4 - Calculation of ending retained earnings balance:
Retained earnings                 (Before stock dividend) $532,000
Less: Stock Dividends          [Refer working note 3] $371,000
Retained earnings                (After stock dividend) $161,000

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