Share
Explore BrainMass

# Accounting for and presentation of owner's equity

As of March 11, 2007, Swanson Group, Ltd. had 300,000 shares of 10\$ par value common stock authorized and 185,000 shares issued. There were 6,000 shares of treasury stock that had been purchased by the firm at an average cost of 12\$. The market value of the stock on March 11, 2007, was 22\$

a. how many shares of common stock are outstanding on March 11, 2007- show how you got your answer.

b. Assume that on March 11, 2007, the board of directors declared a cash dividend of \$0.15 per share, payable on April 4, 2007, to owners of record on March 11, 2007. What is the amount of the dividend payable that would appear on the March 31, 2007 balance sheet?

c. Assume that instead of a cash dividend, the board of directors declared a 4% stock dividend. Calculate the amount of retained earnings that would be capitalized as a result of the stock dividend.

d. Assume that instead of either the cash dividend or the stock dividend, the board of directors approve a 2 for 1 stock split. How many shares of stock will be outstanding after the stock split?

e. If you were a stockholder of the Swanson group which would you prefer, a cash dividend, a stock dividend, or a stock split? explain your answer.

#### Solution Summary

The accounting for and presentations of owner's equity is examined.

\$2.19