A firm's balance sheet has the following entries:
Total Assets: 100,000,000
Common Stock ($10,000,000 shares outstanding $2 par) 20,000,000
Additional paid-in capital 5,000,000
Retained earnings 35,000,000
What will be each of these balance sheet entries after a
a) $2 a share cash dividend
b) four-for-one split
c) 5 percent stock dividend (current price of the stock is $20)
a) When cash dividend is paid, cash will reduce and retained earnings will reduce. Total number of shares are 10,000,000 X $2 = $20,000,000 will be the amount. The balance sheet will be
Cash $10,000,000 (reduce by 20,000,000)
Total Assets: 80,000,000 (reduce by 20,000,000)
Common Stock ($10,000,000 shares outstanding $2 par) ...
The solution explains the impact on the balance sheet of a cash dividend, stock dividend and stock split
Pittman Corporation Dividends, Stock Splits, Stockholder's Equity
See attached worksheets for completion of problems.
The stockholder's equity section of the balance sheet of Pittman Corporation as of December 31, 20x7, was as follows:
Common stock, $4 par value, 500,000 shares authorized,
200,000 shares issued and outstanding $800,000
Additional paid-in capital $1,000,000
Total Paid contributed capital $1,800,000
Retained Earnings $1,200,000
Total stockholder's equity $3,000,000
Pittman Corporation had the following transactions in 20x8:
Feb 28. The board of directors declared a 10 percent stock dividend to stockholders of record on March 25 to be distributed on April 5. The market value on this date is $16.
Mar. 25 Date of record for stock dividend.
Apr. 5 Issued stock dividend
Aug 3. Declared a 2 for 1 stock split
Nov 20 Purchased 18,000 shares of the company's common stock at $8 per share for the treasury.
Dec. 31 Declared a 5 percent stock dividend to stockholders of record on January 25 to be distributed on February 5. The market value per share was $9.
1. Record the stockholder's equity components of the transactions for Pittman Corporation in T accounts.
2. Prepare the stockholder's equity section of the company's balance sheet as of December 31 20x8. Assume net income for 20x8 is $108,000.View Full Posting Details