Peterson Co.’s shareholder equity and the percentage of an upcoming stock divide
ID: 2339375 • Letter: P
Question
Peterson Co.’s shareholder equity and the percentage of an upcoming stock dividend.
Peterson is considering either a 34% stock dividend or a 7% stock dividend.
Insert the total equity amount here. (The company is using the cost method for treasury stock.):
$__________________________________.
Set up cell C16 on P1 so that it AUTOMATICALLY displays the word “Small” or the word “Large” as appropriate to describe the stock dividend (the IF function would accomplish this). Assume a small stock dividend is less than 25%.
Insert the Retained Earnings amount here:
$___________________________________ (% = 34%)
Total each of the columns. Note the total of the “Effect” column should be zero.
Peterson Co.
Shareholder Equity
Stock Dividend
Adjusted
Description
Amount in $
Effect
Amount
Subtotal
less Treasury stock
Total shareholder equity
Stock Dividend
Large
Use this percentage
No. of common shares outstanding
No. of new shares
Debit R/E using amount per share
Information
Market value of common stock
$16.33
per share
No. of common shares in treasury
19,745
No. of common shares issued
142,886
Paid in capital, excess of par
$1,789,653
Par value of common stock
$2.75
per share
Price paid for shares in the treasury
$8.96
per share
Retained earnings
$1,047,886
Stock dividend
34%
Peterson Co.
Shareholder Equity
Stock Dividend
Adjusted
Description
Amount in $
Effect
Amount
Subtotal
less Treasury stock
Total shareholder equity
Stock Dividend
Large
Use this percentage
No. of common shares outstanding
No. of new shares
Debit R/E using amount per share
Explanation / Answer
Peterson Co. Shareholder's equity Stock dividend Adjusted Description Amount in $ Effect Amount In case of 7% stock dividend (Note:1) Small Common stock (142886*2.75) 392936.5 27505.5 420442 Paid in capital, excess of par 1789653 135827.2 1925480 Retained earnings 1047886 -163332.70 884553.3 3230475.5 3230476 Less: Treasury stock (19745*8.96) 176915.2 176915.2 Shareholder's equity 3053560.3 0 3053560.3 Note:1 7% stock dividend issued Number of additional shares to be issues=Number of common shares*Stock dividend %=142886*7%=10002.02=10002 shares Entry : Debit Credit Retained earnings (10002*16.33) 163332.7 Common stock (10002*2.75) 27505.5 Paid in capital, excess of par 135827.16 Peterson Co. Shareholder's equity Stock dividend Adjusted Description Amount in $ Effect Amount In case of 7% stock dividend (Note:1) Large Common stock (142886*2.75) 392936.5 133597.75 526534.3 Paid in capital, excess of par 1789653 1789653 Retained earnings 1047886 -133597.75 914288.3 3230475.5 3230476 Less: Treasury stock (19745*8.96) 176915.2 176915.2 Shareholder's equity 3053560.3 0 3053560.3 Note:1 34% stock dividend issued Number of additional shares to be issues=Number of common shares*Stock dividend %=142886*34%=48581.24=48581 shares Entry : Debit Credit Retained earnings (48581*2.75) 133597.75 Common stock (48581*2.75) 133597.75 Formula for computing small or large stock dividend: Assume Cell C16 contains % of stock dividend Then our wquation will be =If (C16Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.