Reference no: EM132419787
Columbia Paper has the following stockholders' equity account. The firm's common stock has a current market price of $30 per share.
Preferred stock $100,000
Common stock (10,000 shares at $2 par) 20,000
Paid-in capital in excess of par 280,000
Retained earnings 100,000
Total stockholders' equity $500,000
a. Show the effects on Columbia of a 5% stock dividend.
b. Show the effects of (1) a 10% and (2) a 20% stock dividend.
c. In light of your answers to parts aand b, discuss the effects of stock dividends on stockholders' equity.
a. The effects on Columbia of a 5% stock dividend.
Preferred stock $100,000
Common stock (10,500 shares at $2 par) 21,000
Paid-in capital in excess of par 304,000
Retained earnings 85,000
Total stockholders' equity $500,000
How did they get 304,000 for the Paid In Capital, also, is 304,000 correct?