Stock dividends - distributable on July 17th to...

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Stock dividends Stock dividends are used when a company needs to maintain its cash in the business but wants to  provide a dividend to its stockholders. The size of a stock dividend determines how it is valued. A  small size dividend (less than 20–25% of outstanding shares) is usually valued at the market value of  the stock. A large size dividend (more than 20–25% of outstanding shares) is usually valued at par  or stated value. Assume the Board of Directors of Grandma's Girls authorizes a 10% stock dividend on May 20th, 
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Unformatted text preview: distributable on July 17th to stockholders of record on June 9th when the stock is selling for $20 per share. Before the dividend, the company's balance sheet had the following stockholders' equity section: Common Stock, $3 par value, 1,500,000 shares authorized, 500,000 shares issued and outstanding $1,500,000 Additional Paid-in-Capital 6,000,000 Retained Earnings 2,325,000 Total stockholders' equity $9,825,000...
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