The Percolator Company Has the Following Capital Structure: ?The Company Declares a 10% Stock Dividend

question 37

Multiple Choice

The Percolator Company has the following capital structure: ? $\begin{array}{ll}\text { Common stock ( } \$ 5 \text { par, } 250,000 \text { shares) } & \$ 1,250,000 \\\text { Contributed capital in excess of par } & \$ 5,000,000 \\\text { Retained earnings } & \$ 4,000,000\end{array}$ ?The company declares a 10% stock dividend. The pre-stock dividend market price of the company's stock is $50.
Determine the balance in the common stock account after the stock dividend.

• A) $1,250,000
• B) $1,375,000
• C) $125,000
• D) $2,500,000

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Definitions:

Equity Financing

Raising capital through the sale of shares in a company, offering investors ownership interests.

Venture Capitalist

An investor who provides capital to startup companies and small businesses with potential for long-term growth.