Indicate account balances after a stock dividend On October

Indicate account balances after a stock dividend. On October 1, Little Bobby Corporation\'s stockholders\' equity is as follows. On October I. Little Bobby declares and distributes a 10% stock dividend when the market price of the stock is $15 per share. Compute the par value per share (1) before the stock dividend and (2) after the stock dividend. Indicate the balances in the three stockholders\' equity accounts after the stock dividend shares have been distributed.

Solution

(a)Par value per share will not change as stock dividend is given as the no. of new shares were issued from accumulated profit ,i.e., existing par value of $5 will remain same.

(b)

Balance in the stockholder\'s equity account account will also not change as the new stock in the form of stock dividend is also issued form equity shareholder\'s fund.