Problem #10Share Dividends and Share SplitsOn Jan. 1, 2019, the records of Matuguinas Corporation showed the following balances:Ordinary Shares, P1 parShare Premium-OrdinaryRetained EarningsP 80,000920,000760,000On Jan. 15, 2019, the board of directors declared a 3% share dividend; the stock'smarket price was P50 per share. On Nov. 4, 2019, the board of directors declared a 2-for-1 share split; the stock's market price was P90 per share.Required:How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019assuming no other events related to shareholders' equity occurred?1.2. What effect did the share dividends have. on total shareholders' equity?3. Prepare the entries for these two events.4. Why would a corporation declare a share split?5. What would the second entry have been if the corporation had declared a 100%share dividend instead of a 2-for-1 share split?

A 2-for-1 stock split gives you two shares in a company for everyone you own. If you own 1000 shares…

1. How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019 assuming no other events related to shareholders' equity occurred? 2. What effect did the share dividends have.on total shareholders' equity? Dronaro the entries for these two events.

1. How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019 assuming no other events related to shareholders' equity occurred? 2. What effect did the share dividends have.on total shareholders' equity? Dronaro the entries for these two events.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

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Problem #10
Share Dividends and Share Splits
On Jan. 1, 2019, the records of Matuguinas Corporation showed the following balances:
Ordinary Shares, P1 par
Share Premium-Ordinary
Retained Earnings
P 80,000
920,000
760,000
On Jan. 15, 2019, the board of directors declared a 3% share dividend; the stock's
market price was P50 per share. On Nov. 4, 2019, the board of directors declared a 2-
for-1 share split; the stock's market price was P90 per share.
Required:
How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019
assuming no other events related to shareholders' equity occurred?
1.
2. What effect did the share dividends have. on total shareholders' equity?
3. Prepare the entries for these two events.
4. Why would a corporation declare a share split?
5. What would the second entry have been if the corporation had declared a 100%
share dividend instead of a 2-for-1 share split?

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