Question

On January 1, McCarver Corporation had 600,000 shares of $10 par value common stock outstanding. On March 31 the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,a. McCarver's Paid-in Capital in Excess of Par Value account increased $300,000.b. McCarver's total stockholders' equity was unaffected.c. McCarver's Stock Dividends account increased $900,000.d. All of these answer choices are correct.

Answer 1

Answer:

.d. All of these answer choices are correct.

Explanation:

600,000 x 10% = 60,000 shares x 15 market price = 900,000 stock dividends

60,000 x 10 face value = 600,000 common stock

60,000 x 5 = 300,000 additional paid-in (a)

retained earnings               900,000

  stock dividends                                 900,000 (c)

-- when declaring the dividends---

stock dividneds 900,000

   common stock                 600,000

   additional paid in capital 300,000

-- to record payment ----

When delcaring we decrease RE which is equity by 900,00

then when performing the payment we increase common stock and additional paid-in captal by a totla of 900,000

so the equity remains unchanged. (b)

Thus, all answer choices are correct