Exercise 11-5 Stock dividends and splits LO P2 On June 30, 2017, Sharper Corpora
ID: 2591954 • Letter: E
Question
Exercise 11-5 Stock dividends and splits LO P2 On June 30, 2017, Sharper Corporation's common stock is priced at $29.00 per share before any stock dividend or split, and the stockholders equity section of its balance sheet appears as follows. Common stock-$10 par value, 80,000 shares authorized, 32,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 320,000 100,000 420,000 $ 840,000 I. Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock's par value. Answer these questions about stockholders' equity as it exists after issuing the nevw shares. a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders' equity and number of outstanding shares. 2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1. Answer these questions about stockholders equity as it exists after issuing the new shares. a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders' equity and number of outstanding shares.Explanation / Answer
For less then 25% stock dividend market price of the share will be taken for dividend declaration
as it is more than 25% - so stock diclaration will be on par value
Stock Dividend Before Stockdividend Impact of Stock
Dividend After Stock
Dividend Common Stock 320000 320000 640000 Paid in Capital in excess of par value 100000 - 100000 Total Contribution Capital 420000 320000 740000 Retained Earnings 420000 -320000 100000 Total Stockholders' equity 840000 0 840000 Number of common Shares outstanding 3200 3200 6400
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