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The stockholders' equity section of Swifty Corporation consists of common stock ($10 par) $1,550,000 and retained earnings $510,000. A 10% stock dividend (15,500 shares) is declared when the market price per share is $15. Show the before-and-after effects of the dividend on the following. The components of stockholders' equity. (b) Shares outstanding. (c) Par value per share.

The stockholders' equity section of Swifty Corporation consists of common stock ($10 par) $1,550,000 and retained earnings $510,000. A 10% stock dividend (15,500 shares) is declared when the market price per share is $15. Show the before-and-after effects of the dividend on the following. The components of stockholders' equity. (b) Shares outstanding. (c) Par value per share.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The stockholders' equity section of Swifty Corporation consists of common stock ($10 par) $1,550,000 and retained earnings $510,000. A 10% stock dividend (15,500 shares) is declared when the market price per share is $15. Show the before-and-after effects of the dividend on the following. (a) The components of stockholders' equity. (b) Shares outstanding. (c) Par value per share. Before After Dividend Dividend Stockholders' equity 2$ 2$ Outstanding shares Par value per share $4
Transcribed Image Text:The stockholders' equity section of Swifty Corporation consists of common stock ($10 par) $1,550,000 and retained earnings $510,000. A 10% stock dividend (15,500 shares) is declared when the market price per share is $15. Show the before-and-after effects of the dividend on the following. (a) The components of stockholders' equity. (b) Shares outstanding. (c) Par value per share. Before After Dividend Dividend Stockholders' equity 2$ 2$ Outstanding shares Par value per share $4
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Stock dividend is a method of capitalizing the retained earning. Under this, no profit is distributed in cash but this dividend increases the number of outstanding shares by reducing the retained earnings.

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