The owners\' equity accounts for Hexagon International are shown here: If Hexago
ID: 2769152 • Letter: T
Question
The owners' equity accounts for Hexagon International are shown here: If Hexagon stock currently sells for $20 per share and a 15 percent stock dividend is declared, how many new shares will be distributed? (Do not round intermediate calculations.) Show the new equity account balances after the stock dividend is paid. (Do not round intermediate calculations.) If Hexagon declared a 20 percent stock dividend, how many new shares will be distributed? (Do not round intermediate calculations.) Show the new equity account balances after the stock dividend is paid. (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.)Explanation / Answer
a-1
No. of existing shares = common stock / par value
= 45,000 / 0.60
= 75,000
New shares issued = no. of existing shares x stock dividend %
= 75,000 x 15%
= 11,250
a-2)
Capital surplus per share = 365000 / 75000 = 4.8667
Common stock (75000+11250) x 0.60 = 51,750
Capital surplus = (75000+11250) x 4.8667 = 419,750
Retained earnings = 798,120 -51,750 – 419,750 = 326,620
b-1)
New shares issued = no. of existing shares x stock dividend %
= 75,000 x 20%
= 15,000
b-2)
Common stock (75000+15,000) x 0.60 = 54,000
Capital surplus = (75000+15,000) x 4.8667 =438,000
Retained earnings = 798,120 -54,000 – 438,000 = 306120
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