Brief Exercise 11-6 The stockholders’ equity section of Marigold Corp.’s balance

Question

Brief Exercise 11-6

The stockholders’ equity section of Marigold Corp.’s balance sheet consists of common stock ($7 par) $959,000 and retained earnings $410,000. A 10% stock dividend (13,700 shares) is declared when the market price per share is $18.

(a) Show the before-and-after effects of the dividend on the components of stockholders’ equity.

Before Dividend

After Dividend

(b) Show the before-and-after effects of the dividend on the shares outstanding.

Before Dividend

After Dividend

Outstanding shares

Before Dividend

After Dividend

select an opening section name

Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesNet Income / (Loss)Property, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' EquityPaid-in CapitalTotal Paid-in Capital

select an opening subsection name

Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesNet Income / (Loss)Property, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' EquityPaid-in CapitalTotal Paid-in Capital

enter a balance sheet item

$enter a dollar amount

$enter a dollar amount

enter a balance sheet item

enter a dollar amount

enter a dollar amount

select a closing subsection name

    Current Assets    Current Liabilities    Intangible Assets    Long-term Investments    Long-term Liabilities    Net Income / (Loss)    Property, Plant and Equipment    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    Paid-in Capital    Total Paid-in Capital    

enter a subtotal of the two previous amounts

enter a subtotal of the two previous amounts

enter a balance sheet item

enter a dollar amount

enter a dollar amount

select a closing section name

    Current Assets    Current Liabilities    Intangible Assets    Long-term Investments    Long-term Liabilities    Net Income / (Loss)    Property, Plant and Equipment    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    Paid-in Capital    Total Paid-in Capital    

$enter a total amount for this section

$enter a total amount for this section

Explanation / Answer

Outstanding shares $959,000/$7 = 137,000 137,000 + 13,700 = 150,700

Before divided After dividend Stockholders' equity Paid in capital Common stock @ 7 par $            959,000 $959,000 + (13,700*$7) = $1,054,900 additional paid in capital 13,700 * ($18-$7) = $150,700 Total paid in capital $            959,000 $                                                     1,205,600 Retained earnings $            410,000 $410,000 - (13,700 * $18) = $163,400 Total stockholders' equity $        1,369,000 $                                                     1,369,000

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