1. Exercise 10-72 (Algorithmic) Stock Dividends and Stock Splits

   The balance sheet of Castle Corporation includes the following stockholders' equity section:

   Common stock, $2 par, 50,000 shares authorized, 30,000 shares issued and outstanding	$ 60,000
   Additional paid-in capital--Common Stock	67,900
   Total capital stock	$127,900
   Retained earnings	73,000
   Total equity	$200,900

   Required:

   1. Assume that Castle issued 30,000 shares for cash at the inception of the corporation and that no new shares have been issued since. Determine how much cash was received for the shares issued at inception. $

   2. Assume that Castle issued 15,000 shares for cash at the inception of the corporation and subsequently declared a 2-for-1 stock split. Determine how much cash was received for the shares issued at inception. $

   3. Assume that Castle issued 25,000 shares for cash at the inception of the corporation and that the remaining 5,000 shares were issued as the result of stock dividends that capitalized retained earnings of $21,600. Determine how much cash was received for the shares issued at inception. $

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   1. Contributed capital represents the owners contributions in exchange for stock.

   2. Contributed capital represents the owners contributions in exchange for stock.

   3. Contributed capital represents the owners contributions in exchange for stock.

   Small stock dividends are capitalized using the stocks market value, while large stock dividends are capitalized at the stocks par value.