W16-6 EC Corporation has outstanding 3,000,000 shares of common stock of a par value of P10 each. The balance in its Retained Earnings account at January 1, 2019, was P24,000,000, and it then had Paid-in Capital in Excess of Par-Common Stock of P5,000,000. During 2019, the company's net income was P4, 700,000. A cash dividend of PO.60 a share was declared on May 5, 2019, and was paid June 30, 2019, and a 6% stock dividend was declared on November 30, 2019, and distributed to stockholders of record at the close of business on December 31, 2019. You have been asked to advise on the proper accounting treatment of the stock dividend. The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows.

W16-6 EC Corporation has outstanding 3,000,000 shares of common stock of a par value of P10 each. The balance in its Retained Earnings account at January 1, 2019, was P24,000,000, and it then had Paid-in Capital in Excess of Par-Common Stock of P5,000,000. During 2019, the company's net income was P4, 700,000. A cash dividend of PO.60 a share was declared on May 5, 2019, and was paid June 30, 2019, and a 6% stock dividend was declared on November 30, 2019, and distributed to stockholders of record at the close of business on December 31, 2019. You have been asked to advise on the proper accounting treatment of the stock dividend. The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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