Purchase Solution

# Stock Dividend

Not what you're looking for?

A company with a stock price of \$50.00 and the following equity accounts issues a 5% stock dividend. How will the equity accounts change and what will the new stock price be?

Common stock @ \$1 par value \$200,000<br>
Retained income \$3,000,000<br>
Stockholder's equity \$5,000,000<br><br>

Stock price \$50.00<br>

##### Solution Summary

This problem looks at the effects of a stock dividend on a company's equity accounts.

##### Solution Preview

New common stock value
The first step is to calculate the number of shares outstanding. This can be accomplished by dividing the common stock value by the par value (\$1 in this case) to get the total number of shares outstanding. Next you can calculate the increase in the number of shares outstanding by multiplying the percentage increase by the number of shares outstanding. Add this increase in the number of shares to the shares that were already outstanding to get the new number of shares outstanding. To get the common stock value after the stock dividend you multiply the new number of shares outstanding by the par value (\$1 in this case) of the stock.
Number of ...

##### Free BrainMass Quizzes

Importance of Critical Thinking

##### Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

##### Basics of corporate finance

These questions will test you on your knowledge of finance.

##### Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

##### MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.