A corporation reported the following information at December 31, 2015: Common St
ID: 2469507 • Letter: A
Question
A corporation reported the following information at December 31, 2015:
Common Stock, $3 par, 10,000 shares authorized, issued and outstanding $30,000
Paid-in Capital in Excess of Par--Common Stock 80,000
Total Capital Stock $110,000
Retained Earnings 40,000
Total Stockholders' Equity $150,000
A) On December 31, 2015, the board of directors issues a 3-for-1 stock split. What impact will the split have on the stock's par value?
Par value would be cut in(to) because the number of shares would . The resulting (new) par value would be $
per share.
B) What journal entry is required to record the split?
C) Record the declaration of a cash dividend of $1 per share on January 10, 2016. The dividend will be paid on January 31, 2016 to shareholders of record on January 24, 2016.
The stockholders' equity section of a balance sheet at December 31, 2015, is as follows:
7% Preferred Stock, $1 par, 10,000 shares authorized, 3,000 shares issued
$3,000
Common Stock, $1 par, 150,000 share authorized, 10,000 shares issued
10,000
Paid-in Capital in Excess of Par:
Preferred Stock
9,000
Common Stock
20,000
Total Capital Stock
42,000
Retained Earnings
150,000
Less: Treasury Stock (1,000 common shares at cost)
6,000
Total Stockholders' Equity
$186,000
A) What was the average issue price of the preferred stock?
$ per share
B) What was the average issue price of the common stock?
$ per share
C) What will be the retained earnings account balance immediately following a 2-for-1 stock split?
$
D) If the company's board of directors declares a cash dividend consisting of the annual stated dividend rate for preferred stockholders plus $1 per share for common stockholders, what is the total amount of dividends to be paid and what would be the remaining balance in the retained earnings account immediately following the declaration of this cash dividend?
Total dividends: $
Retained earnings: $
7% Preferred Stock, $1 par, 10,000 shares authorized, 3,000 shares issued
$3,000
Common Stock, $1 par, 150,000 share authorized, 10,000 shares issued
10,000
Paid-in Capital in Excess of Par:
Preferred Stock
9,000
Common Stock
20,000
Total Capital Stock
42,000
Retained Earnings
150,000
Less: Treasury Stock (1,000 common shares at cost)
6,000
Total Stockholders' Equity
$186,000
Explanation / Answer
Answer:a On December 31, 2015, the board of directors issues a 3-for-1 stock split.
Par value would be cut into thirds because the number of shares would triple The resulting (new) par value would be $1 per share ($3/3=$1).
Answer:b No journal entry is required for stock split as there has been no change in the total equity of the business.
Answer:c
Dividend A/C Dr. $30000
To Dividend Payable A/C $30000
Dividend Payable A/C Dr. $30000
To cash A/C $30000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.