The Western Pipe Company has the following capital section in its balance sheet.

Question

The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $6 per share.
Common stock (55,000 shares at $2 par) $ 110,000 Capital in excess of par 110,000 Retained earnings 280,000 $ 500,000
The firm intends to first declare a 10 percent stock dividend and then pay a 15-cent cash dividend (which also causes a reduction of retained earnings).
Show the capital section of the balance sheet after the first transaction and then after the second transaction. (Omit the "$" sign in your response.)
WESTERN PIPE CO. After 1st transaction Common stock $ Capital in excess of par Retained earnings $
WESTERN PIPE CO. After 2nd transaction Common stock $ Capital in excess of par Retained earnings $ The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $6 per share.

Explanation / Answer

1. Common stock (60,500@2)     121,000

Capital in excess of par                132,000

Retained earnings                         247,000

Total                                              500,000

2. Common Stock                         121,000

Capital in excess of par                 132,000

Retained earnings                          237,925

Total                                              490,925

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