The Stockholders' Equity Section of the Balance Sheet for High

question 160

Essay

The Stockholders' Equity section of the balance sheet for High Five Design Company appeared as follows before its recent stock dividend:

$$\begin{array} { l r } \text { Common stock, } \$ 3 \text { par, } 100,000 \text { shares issued and outstanding } & \$ 300,000 \\\text { Additional paid-in capital-Common } & 150,000 \\\text { Retained earnings } & \underline{ 425,000} \\\text { Total stockholders' equity } & \underline{\$ 875,000 }\\\end{array}$$
High Five declared a 10% stock dividend when the market price per share was $7.In the space provided,write in the amounts of each of the components of the Stockholders' Equity section,after the stock dividend was distributed.
$\begin{array}{ll}\text { Common stock } & \$\underline{\quad\quad} \\\text { Additional paid-in capital—common stock } & \$\underline{\quad\quad} \\\text { Retained earnings } & \$\underline{\quad\quad}\end{array}$

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or sales, such as rent, salaries, and loan payments.

Marginal Productivity

Marginal productivity measures the change in output resulting from altering the level of a single input while holding other inputs constant.

Marginal Costs

The added financial burden of creating one more unit of a product or service.

Average Costs

The total cost of production divided by the quantity produced, often used to evaluate production efficiency.