Question

Allied Industries, Inc. has 250,000 shares of $7-par common stock outstanding. They've declared a 7% stock dividend. The current market price of the common stock is $11/share. What amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration?

Answer 1

Answer: $70,000

Step-by-step explanation:

Given the following :

Outstanding stock = 250,000

Par value of common stock = $7

Market price of common stock = $11

Stock Dividend = 7% = 0.07

Excess of par = $(11 - 7) = $4

Paid in capital in excess of par :

Number of outstanding stock × excess par value × stock Dividend

250,000 × $4 × 0.07 = $70,000

Paid-in capital in excess of par = $70,000