On June 30th ’05, Scizzory Corporation’s common stock is priced at $31 per share before any stock dividend or split, and the stockholders’ equity section of its balance sheet appears as follows:
Common stock - $10 par value, 60,000 shares authorized
25,000 shares issued and outstanding $250,000
Contributed capital in excess of par value,
Common stock 100,000
Total Contributed capital $350,000
Retained earnings 330,000
Total stockholders’ equity $680,000
1) Assume that the company declares and immediately distributes a 100% stock dividend. This even is recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions about stockholders’ equity as it exists after issuing the new shares:
a) What is the retained earnings balance?
b) What is the amount of total stockholders’ equity?
c) How many shares are outstanding?
I'm completely confused when it comes to stock dividends and retained earnings - can anyone help? Thanks, Karma
