11 Determining the effects of stock splits on the accounting records The market
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Question
11 Determining the effects of stock splits on the accounting records
The market value of Dylan Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Dylan declared a 3-for-1 stock split for the 200,000 outstanding shares of its $10 par common stock.
b.
Determine the number of common shares outstanding and the par value after the split. (Round your "Par value" to 2 decimal places.)
NUMBER OF SHARES ( )
PAR VALUE ( ) PER SHARE
8 Recording and reporting common and preferred stock transactions
Goldman Inc. was organized on June 1, 2014. It was authorized to issue 500,000 shares of $10 par common stock and 100,000 shares of 4 percent cumulative class A preferred stock. The class A stock had a stated value of $50 per share. The following stock transactions pertain to Goldman Inc.:
Prepare the stockholders’ equity section of the balance sheet immediately after these transactions have been recognized.
GOLDMAN, INC.
BALANCE SHEET (PARTIAL)
AS OF DECEMBER 31, 2014
Stockholders Equity
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
Total Stockholders Equity $ ____________________
Common stock Dividends Notes payable Notes receivable
Paid-in capital in excess of par, common stock
Paid-in capital in excess of stated value, preferred stock
Preferred stock Retained earnings Treasury stock
9 Effect of no-par common and par preferred stock on the horizontal statements model LO 8-4
Bailey Corporation issued 10,000 shares of no-par common stock for $25 per share. Bailey also issued 3,000 shares of $40 par, 6 percent noncumulative preferred stock at $42 per share.
Record these events in a horizontal statements model like the following one. In the cash flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). Use NA to indicate that an element was not affected by the event. Show effect on the accounting equation in the order provided in the question. (Enter any decreases to account balances and cash outflows with a minus sign.)
PAID-IN
PREFERRED COMMON CAPITAL-IN NET STATEMENT OF
EVENT CASH =STOCK + STOCK + EXCESS REVENUE - EXPENSE = INCOME CASH FLOW
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The market value of Dylan Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Dylan declared a 3-for-1 stock split for the 200,000 outstanding shares of its $10 par common stock.
Explanation / Answer
11)
Number of shares of common stock outstanding before the split = 200000
Number of shares after the split (in the ratio of 3 to 1) = 20000 * 3 = 60000
The par value of shares after the stock split = $10/3 = $3.33
Recording and reporting common and preferred stock transactions
Last part:
Cash flow statement
Goldman Inc. Balance Sheet(partial) As of Dec 31, 2014 Stock Holders equity $ Common Stock Authorised 500000 shares @ $10 each Issued 100000 shares $10 each 1000000 Class A stock Authorised 100000 shares of 4% preferred stock with stated value $50 per share Issued 20000 shares of $50 stated value each 1000000 Paid up capital in excess of par value-common stock 840000 Paid up capital in excess of stated value-Class A stock 40000 Total Stockholders equity 2880000Related Questions
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