Purchase Solution

The Effect of Stock Issuance, Dividends and Depreciation.

Not what you're looking for?

Ask Custom Question

The directors of Caldwell Corp. are trying to decide whether they should issue par or no par stock. They are considering three alternatives for their new stock, which they are assuming will be issued at $8 per share. The alternatives are: (A) $5 par value, (B) no par with a $1 stated value, and (C) no par, no stated value. If 60,000 shares are issued, what amount will be credited to the common stock account in each of these cases?
(A) (B) (C)
a. $60,000 $300,000 $480,000
b. $60,000 $480,000 $480,000
c. $480,000 $480,000 $480,000
d. $300,000 $60,000 $480,000

____ What is the effect on total paid-in capital of a stock dividend and a stock split, respectively?
Stock Dividend Stock Split
a. Increase No effect
b. No effect No effect
c. Decrease No effect
d. Decrease Decrease

____ Felker Company changed from the straight-line method to the double-declining-balance method of depreciation during 2000 for equipment purchased for $300,000 on January 1, 1998. The equipment has an estimated 5-year life with no salvage. Felker's tax rate is 40%. Felker should report depreciation expense and a cumulative effect of change in accounting principle in 2000 of
Depreciation Expense Cumulative Effect
a. $43,200 $43,200
b. $28,800 $28,800
c. $25,920 $41,920
d. $43,200 $72,000

Purchase this Solution
Solution Summary

The Effect of Stock Issuance, Dividends and Depreciation on Company Valuation.

Solution Preview

Please find attached a formatted MS Excel spreadsheet containing the text below. Feel free to contact me in the future in the event that additional assistance is required.

The directors of Caldwell Corp. are trying to decide whether they should issue par or no par stock.
They are considering three alternatives for their new stock, which they are assuming will be issued
at $8 per share. The alternatives are: (A) $5 par value, (B) no par with a $1 stated value, and (C)
no par, no stated ...

Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • Statement of Cash Flow items

    Which of the following represents an inflow of cash and would be reported on the statement of cash flows? a issuance of long term dept b acquistion of treasury stock c declaration of stock dividends d appropriation of retained earnings 16.

  • Prepare Statement of Cash Flows using indirect method

    Dividends declared and paid were $19,5000. 2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $4,900.

  • Impact of transactions on financial accounting

    Discuss the effect of debt and equity transactions on the company financial statements. • How are the financial statements affected by the issuance of debt? • How are the financial statements affected by the issuance of stock?

  • Eleven Accounting Definitions

    debit for stock dividends distributed 2. Common Stock?credit for issuance at par for cash 3. Bonds Payable?debit for redemption of bonds 4. Office Supplies?net decrease 5. Accounts Receivable?net decrease 6. Retained Earnings?

  • Calculate cash from investments

    of notes $133,000 Accounts Payable $112,000 $120,000 Repayment of bonds $50,000 Salaries Payable $30,000 $28,000 Cash dividends ($7,000) Bonds Payable $50,000 $30,000 Issuance of common stocks $600,000 Common

  • Smith Company Dec 2012 Module 3 balance sheet

    Issuing stock and paying dividends do not impact profits. Dividends are a return of profits to the owners. The loan, however, will impact profits as soon as interest begins to accrue.

  • Logan Company: Statement of cash flows

    So, the decreases in both debts mean that the company pays out the money to settle the debts. For dividends paid, it is also regarded as financing activities, and the payment of dividends is the outflow of cash.

  • Analysis of Comparative Balance Sheets

    on investment in stock (g) Receipt of interest on notes receivable (h) Issuance of capital stock (i) Amortization of patent (j) Issuance of bonds for land (k) Purchase of

  • Statement of Cash Flows: Classification of Transactions

    Purchase of land and building c. Redemption of bonds d. Sale of equipment e. Depreciation of machinery f. Amortization of patent g. Issuance of bonds for plant assets h. Payment of cash dividends i.

View More Related Solutions