Chapter 13, Problem 7QS

Accounting for small stock dividend

The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 10% stock dividend. The stock’s per share market value on April 2 is $20 (prior to the dividend). Prepare the stockholders’ equity section immediately after the stock dividend.

Common stock—$5 par value, 375,000 shares authorized, 200,000 shares issued and outstanding	$1,000,000
Paid-in capital in excess of par value, common stock.	600,000
Retained earnings	833,000
Total stockholders’ equity	$2,433,000