The shareholders' equity section of R&L Corporation's balance sheet on December 31, 2011 showed contributed capital of $258,000 for 60,000 authorized shares and additional paid-in capital of $13,600. On February 1, 2012, the board declared a 12% stock dividend to be issued on April 30, resulting in additional shares being issued and increases to contributed capital and retained earnings.

1. On December 31,2011, the shareholders' equity section of the balance sheet of R & L
Corporation reflected the following: On February 1,2012, the board of directors declared a 12
percent stock dividend to be issued April 30,2012. The market value of the shares on February
1,2012, was $16 per share. Required: For comparative purposes, prepare the shareholders'
equity section of the balance sheet (a) immediately before the stock dividend and (b)
immediately after the stock dividend. (Omit the "$" sign in your response.)
Solution
Hi,
Please find the alternative solution as follows:
Thanks.
Before Stock Dividend After Stock Dividend
Contributed Capital
Common Shares, Par $10
auth 60000 shares
258000 288960
Additional Paid in
Capital
13600 32176
271600 321136
Retained Earnings 83000 33464
Total Shareholder's
Equity
354600 354600