At the beginning of the year, the stockholders equity section of the balance sheet of Solutions Corporation reflected the following:


At the beginning of the year, the stockholders’ equity section of the balance sheet of Solutions Corporation reflected the following:

Common stock (par $12; authorized 65,000 shares, outstanding 30,000 shares) $360,000

Capital in excess of par 120,000

Retained earnings 736,000

On February 1, 2011, the board of directors declared a 60 percent stock dividend to be issued April 30, 2011. The market value of the stock on February 1, 2011, was $15 per share.


1. For comparative purposes, prepare the Stockholders’ Equity section of the balance sheet

(a) Immediately before the stock dividend and

(b) Immediately after the stock dividend.

2. Explain the effects of this stock dividend on assets, liabilities, and stockholders’ equity.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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...

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Chapter # 11
Section: Exercises
Problem: 22
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Question Posted: December 12, 2011 09:06:33