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Josh's Inc. has 4,800 shares of stock outstanding with a par value of $1 per share and a market value of $19 a share. The balance sheet shows $149,000 in the capital in excess of par account, $4,800 in the common stock account, and $192,800 in the retained earnings account. The firm just announced a stock dividend of 10 percent. What is the value of the capital in excess of par account after the dividend?

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Answer:

The answer is $157,640

Explanation:

Capital in excess of par is the money an investor paid to obtain a company's equity in excess of the par value of the equity.

Par value means face value

Outstanding shares/stock =  4,800 shares

Par value = $1 per share

Market value = $19 per share

Stock dividend = 10 percent or 0.10

Change capital in excess of par = (4,800 shares x 0.10) x ( $19 - $1)

=480 x $18

=$8,640

New capital in excess of par = $149,000 + $8,640

=$157,640

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