The Rupley Company declared and distributed a 5% stock dividend. The stockholders equity before the dividend was
Question:
The Rupley Company declared and distributed a 5% stock dividend. The stockholders’ equity before the dividend was as follows:
Common stock, 5,000,000 shares, $1 par .......$ 5,000,000
Additional paid-in capital ............ 20,000,000
Retained earnings ............... 50,000,000
Total stockholders’ equity ...........$75,000,000
The market price of Rupley’s shares was $10 when the stock dividend was distributed. Rupley paid cash of $15,000 in lieu of issuing fractional shares.
1. Prepare the journal entry for the declaration and distribution of the stock dividend.
2. Show the stockholders’ equity section after the stock dividend.
3. How did the stock dividend affect total stockholders’ equity? How did it affect the proportion of the company owned by each shareholder?
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
1 Retained earnings 2500000 Common stock 1 par 248500 Additional paidin capital 2236500 Cash 15000 T...View the full answer
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
