Area 01 Gaming issued 200,000 shares of $0

Accounting Aug 05, 2020

Area 01 Gaming issued 200,000 shares of $0.50 par common stock on Feburary 1 for $9.00 per share. On August 7, the company declared a 20% stock dividend when the market value of the shares was $11.00. How many shares were outstanding after the dividend?

Expert Solution

Answer : 200,000

Shares outstanding after dividend paid will be same as before dividend is paid i.e 200,000 shares.

There wont be any change in the number of shares when the dividend is paid, Only the price will be changed. The price will be changed to the extend to dividned paid. Dividend paid = share Capital X 20% = $1,00,000 X 20 % = $20,000.

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