Question-based on, "dividends". I have tried it but no luck. The stockholders' equity section of Swifty Corporation consists of common stock ($10 par) $1,550,000 and retained earnings$510,000. A 10% stock dividend (15,500 shares) is declared when the market price per share is $15. Show the before-and-aftereffects of the dividend on the following.(a)The components of stockholders' equity.(b)Shares outstanding.(c)Par value per share.BeforeAfterDividendDividendStockholders' equity2$2$Outstanding sharesPar value per share$4

Answered: The stockholders' equity section of…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 3RE

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Question-based on, "dividends".

I have tried it but no luck.

The stockholders' equity section of Swifty Corporation consists of common stock ($10 par) $1,550,000 and retained earnings
$510,000. A 10% stock dividend (15,500 shares) is declared when the market price per share is $15. Show the before-and-after
effects of the dividend on the following.
(a)
The components of stockholders' equity.
(b)
Shares outstanding.
(c)
Par value per share.
Before
After
Dividend
Dividend
Stockholders' equity
2$
2$
Outstanding shares
Par value per share
$4

Expert Solution

Step 1

Stock dividend is a method of capitalizing the retained earning. Under this, no profit is distributed in cash but this dividend increases the number of outstanding shares by reducing the retained earnings.

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