58 STUDY GUIDE

Question 1

2114.01

Answer 1

Question 2

2114.02

Answer 2

Tiger Co.’s statement of changes in stockholders’ equity reveals the following:

a. Column headings identify individual stockholders’ equity accounts.
b. Events changing stockholders’ equity accounts are listed chronologically to the left.
c. The body of the statement is presented in terms of the dollar impact of various transactions and events.
d. The impact of the transactions on the number of shares of stock, if any, is presented in the descriptions to the left.
e. The ending balances tie to the items presented in the stockholders’ equity section of the balance sheet on the same dates.

Question 3

Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30% stock dividend. The market value was $50 per share, the par value was $10, and the average issue price was $30 per share. By what amount will Universe decrease stockholders’ equity for the dividend?

$7,500,000

$4,500,000

$1,500,000

$0

Question #300536

Answer 3

$0

Stock dividends are accounted for by reclassifying a portion of retained earnings as contributed capital. They do not reduce assets or increase liabilities. Therefore, total stockholders’ equity is not changed.

Relevant Terms
Stock Dividend
Stockholders’ Equity

Reference
2252.47
2294.17

Authorities
FASB ASC 505-20-25-3