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    jayantchheda's Avatar
    jayantchheda Posts: 1, Reputation: 1
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    #1

    Dec 5, 2009, 05:01 PM
    how to calculate dividends
    A company with 100,000 authorized shares of $4 par common stock issued 40000 shares at $8. subsequently the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the retained earnings account to paid in capital accounts as a result of the stock dividend?? My problem is that when I calculate which value do I use to calculate for the dividends?
    Thanks'
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Dec 6, 2009, 05:38 AM

    Dividends are always calculated on the PAR value of the shares.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #3

    Dec 6, 2009, 05:40 AM

    Simple. Number of shares issued as stock dividends multiplied by the market value will be transferred from retained earnings and credited to common stock at par value and additional capital at the excess of issue price and par value.
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