Myers Company provides you with the following condensed balance sheet informatio
ID: 2422696 • Letter: M
Question
Myers Company provides you with the following condensed balance sheet information.
Assets
Liabilities and Stockholders’ Equity
For each transaction below, indicate the dollar impact (if any) on the following five items: (1) total assets, (2) common stock, (3) paid-in capital in excess of par, (4) retained earnings, and (5) stockholders’ equity. (Each situation is independent.)
(a) Myers declares and pays a $0.51 per share cash dividend.
(b) Myers declares and issues a 10% stock dividend when the market price of the stock is $14 per share.
(c) Myers declares and issues a 40% stock dividend when the market price of the stock is $16 per share.
(d) Myers declares and distributes a property dividend. Myers gives one share of its equity investment (ABC stock) for every two shares of Myers Company stock held. ABC is selling for $11 per share on the date the property dividend is declared.
(e) Myers declares a 2-for-1 stock split and issues new shares.
Assets
Current assets $ 40,500 Equity investments (ABC stock; 11,000 shares at cost) 66,000 Equipment (net) 251,900 Intangibles 60,520 Total assets $418,920Liabilities and Stockholders’ Equity
Current and long-term liabilities $104,900 Stockholders’ equity Common stock ($5 par) $ 31,500 Paid-in capital in excess of par 115,600 Retained earnings 166,920 314,020 Total liabilities and stockholders’ equity $418,920Explanation / Answer
(a) Myers declares and pays a $0.51 per share cash dividend. 1 Total assets decrease, increase, no effect Decrease $ 5610 2 Common stock decrease, increase, no effect No effect $ 3 Paid-in capital in excess of par decrease, increase, no effect No effect $ 4 Retained earnings decrease, increase, no effect Decrease $ 5610 5 Total stockholders’ equity decrease, increase, no effect No effect $ (b) Myers declares and issues a 10% stock dividend when the market price of the stock is $14 per share. 1 Total assets decrease, increase, no effect No effect $ 2 Common stock decrease, increase, no effect Increase $ 3780 3 Paid-in capital in excess of par decrease, increase, no effect Increase $ 5040 4 Retained earnings decrease, increase, no effect Decrease $ 8820 5 Total stockholders’ equity decrease, increase. no effect No effect $ (c) Myers declares and issues a 40% stock dividend when the market price of the stock is $16 per share. 1 Total assets decrease, increase, no effect No effect $ 2 Common stock decrease, increase, no effect Increase $ 15120 3 Paid-in capital in excess of par decrease, increase, no effect Increase $ 25200 4 Retained earnings decrease, increase, no effect Decrease $ 40320 5 Total stockholders’ equity decrease, increase, no effect No effect $ (d) Myers declares and distributes a property dividend. Myers gives one share of its equity investment (ABC stock) for every two shares of Myers Company stock held. ABC is selling for $11 per share on the date the property dividend is declared. 1 Total assets decrease, increase, no effect Decrease $ 34650 2 Common stock decrease, increase, no effect Increase $ 18900 3 Paid-in capital in excess of par decrease, increase, no effect Increase $ 15750 4 Retained earnings decrease, increase, no effect No effect $ 5 Total stockholders’ equity decrease increase no effect Increase $ 34650 (e) Myers declares a 2for1 stock split and issues new shares. 1 Total assets decrease, increase, no effect No effect $ 2 Common stock decrease, increase, no effect Increase $ 75600 3 Paid-in capital in excess of par decrease, increase, no effect No effect $ 4 Retained earnings decrease, increase, no effect Decrease $ 75600 5 Total stockholders’ equity decrease, increase, no effect No effect $
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