Kimmel, Accounting, 6e Help I System Announcements NEXT Do It! Review 11-3b 2 Yo

Question

Kimmel, Accounting, 6e Help I System Announcements NEXT Do It! Review 11-3b 2 Your answer is partially correct. Try again. Blossom Company has had 4 years of record earnings. Due to this success, the market price of its 370,000 shares of $2 par value common stock has increased from $15 per share to $51. During this period, paid-in c increased from $1,665,000 to $11,100,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split. He apital remained the same at $2,220,000. Retained earnings asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) par value per 2,830,500 2. 2-for-1 stock split - retained earnings Original Balance After Dividend After Split Paid-in capital N A 4:34 PM OLL

Explanation / Answer

a.

working:

15% stock dividend will reduce the existing retained earnings by (370,000 * 15% *$51) =>$2,830,500.

so the retained earnings after stock dividend = $11,100,000-2,830,500 =>$8,269,500.

2-for-1 stock split does not result in any change in retained earnings.

1.stock dividend - retained earnings $8,269,500 2.2 for 1 stock split - retained earnings $11,100,000

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.