Plack co. purchased 10,000 shares (2% ownership) of ty corp. on february 14, 2001. plack received a stock dividend of 2,000 shares on april 30, 2001, when the market value per share was $35. ty paid a cash dividend of $2 per share on december 15, 2001. in its 2001 income statement, what amount should plack report as dividend income?

Dividend Income  = $24000

Explanation:

Given:

Shares purchased = 10000

Received a stock dividend of 2,000 shares

Market value per share = $35

Cash dividend of $2 per share

It should be duly noted that acknowledgement of a stock dividend is not revenue. It increases the number of shares held and folds the cost ground per share.

∴ Dividend Income  = No. of shares × dividend per share

Dividend Income  = 12000 × $2

Dividend Income  = $24000

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