ired es th Class 15. The stockholders\' equity section of Calabro, Inc. is as fo
ID: 2572495 • Letter: I
Question
ired es th Class 15. The stockholders' equity section of Calabro, Inc. is as follows: $3,000 9,000 4,000 Preferred stock, 7% $10 par, 1,000 shares authorized, 300 shares issued Additional paid-in capital- preferred Common stock, S1 par value, authorized 15,000 shares, issued 4,000 shares Additional paid-in capital- common 50,000 $86,000 -(6,000) $80,000 Retained earnings Total contributed capital and retained earnings Less: Treasury stock (1,000 common shares at cost) Total stockholders' equity The market price of the stock on December 31, 2016, was $8 per share. Answer the following independent questions A) Calculate the average amount at which each share of common stock was initially sold. B) What balance will be in the retained earnings account immediately after the declaration of a 2- C) Ifa cash dividend of SI per share was declared to both common and preferred stockholders, D) What balance will be in the retained earnings account immediately after the declaration of a for-1 stock split? what would be the balance in retained earnings immediately after the declaration? 20% common stock dividend on December 31, 2016?Explanation / Answer
a)average amount of common share=(4000+20000)/4000=$6
b)2 for 1 stock split means additional shares issued of 4000 but the retained earnings will not be effected and remains same as 50000
c) Total dividend Paid=1*(4000+3000-1000)=6000
retained earnings=5000-6000=44000
d) 20% of common stock= 20 %*( 4000-1000) = 600 shares at market price
=600*8=4800
so retained earnings will decrease by it =50000-4800=55200
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