Exercise 11-6 1) paying a $0.50 cash dividend 2 distributing a 4% stock dividend

Question

Exercise 11-6 1) paying a $0.50 cash dividend 2 distributing a 4% stock dividend, or 3) effecting a 2-for-1 stock split. The current share price is Ridgewood Inc is considering one of the three following courses of action: $14 per share Help Ridgewood make its decision by completing the following chart (treat each possibility independently) After Cash Dividend After Stock Dividend After Stock Split Before Action $1,136,000 $255,000 Total assets Total liabilities Shareholders equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Number of common shares 598,000 283,000 831,000 $1,136,000 100,000

Explanation / Answer

Before action After cash dividend After stock dividend Afte stock split Total assets 1136000 1086000 1136000 1136000 Total liabilities 255000 255000 255000 255000 Shareholders' equity Common shares 598000 598000 654000 598000 Retained earnings 283000 233000 227000 283000 Total Shareholders' equity 881000 831000 881000 881000 Total liabilities and Shareholders' equity 1136000 1086000 1136000 1136000 Number of common shares 100000 100000 104000 200000

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