At the end of 20X6, Home Ltd. reported the following in shareholders' equity:Common shares, no par value; authorized, unlimited shares; issued, 14,400,000 sharesRetained earnings$ 18,800,00052,840,000$71,640,000At this time, the shares were trading in the range of $4 to $6 per share on public stock markets. The company's board of directors iscontemplating two alternative courses of action:1. Declaring a 50% stock dividend, or2. Executing a 3-for-2 stock split.Required:1. Prepare the shareholders' equity section for each alternative, assuming that market value is used to capitalize the stock dividend.2. What would be the expected share price in each case?3. Which alternative would shareholders prefer? Explain.4. Which alternative would the company prefer? Explain.

The company pays a dividend to the shareholders, the dividend is the distribution of profit between…

Answered: At the end of 20X6, Home Ltd. reported…

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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Calgate Company had the following shares outstanding and retained earnings at the end of the current year: Preferred shares, 4% (par value $30; outstanding, 11,500 shares) Common shares (outstanding, 45,000 shares) Retained earnings The board of directors is considering the distribution of a cash dividend to the two groups of shareholders. No dividends were declared during the previous two years. Three independent cases are assumed: Case A: The preferred shares are non-cumulative; the total amount of dividends is $54,000. Case B: The preferred shares are cumulative; the total amount of dividends is $75,000. Case C: Same as case B, except the amount is $103,500. Required: 1. Compute the amount of dividends, in total and per share, that would be payable to each class of shareholders for each case. (Round "Per share" to 2 decimal places.) Case A: Total Per share Case B: Total Per share $ 345,000 675,000 170,000 Case C: Total Per share Preferred Shares Common Shares
Chicago Company reported the following information at the end of the current year: Common stock ($10 par value; 48,000 shares outstanding) Preferred stock, 15% ($15 par value; 9,500 shares outstanding) Retained earnings The board of directors is considering the distribution of a cash dividend to the two groups of stockholders. No dividends were declared during the previous two years. Assume the three cases below are independent of each other. Case A: The preferred stock is noncumulative; the total amount of all dividends is $38,500. Case B: The preferred stock is cumulative; the total amount of all dividends is $64,125. Case C: The preferred stock is cumulative; the total amount of all dividends is $91,500. Required: 1. Compute the amount of dividends, in total and per share, that would be payable to each class of stockholders for each case. 2. Assume Chicago Company issued a 15 percent common stock dividend on the outstanding shares when the market value per share was $39. Fill in the…
most possible answer is 8,300,000 Please show solution in good accounting form
Nevada Corporation has 65,772 shares of $23 par stock outstanding that has a current market value of $266 per share. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be Oa. 13,154 Ob. 328,860 O c. 756,378 Od. 65,772 A
A corporation has 71,868 shares of $36 par stock outstanding that has a current market value of $312 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately a.$17,967 b.$9 c.$78 d.$276
Required information E11-2 (Algo) Reporting Stockholders' Equity and Determining Dividend Policy [LO 11-2, LO 11-3] [The following information applies to the questions displayed below.] Incentive Corporation was authorized to issue 12,000 shares of common stock, each with a $2 par value. During its first year, the following selected transactions were completed: a. Issued 6,200 shares of common stock for cash at $22 per share. b. Issued 2,200 shares of common stock for cash at $25 per share. E11-2 (Algo) Part 4 4. Incentive Corporation has $32,000 in the company's bank account. At year-end, the accounts reflected a profit of $300. What is the maximum amount of cash dividends the company can declare and distribute? Maximum amount of cash dividends
Ashkenazi Companies has the following stockholders' equity account: Common stock (425,901 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $1,277,703 3,383,532 938,765 $5,600,000 Assuming that state laws define legal capital solely as the par value of common stock, how much of a per-share dividend can Ashkenazi pay? If legal capital were more broadly defined to include all paid-in capital, how much of a per-share dividend can Ashkenazi pay? Assuming that state laws define legal capital solely as the par value of common stock, the per-share dividend Ashkenazi can pay is $ (Round to the nearest cent.)
On October 31, the stockholders' equity section of Blossom Corporation's balance sheet consists of common stock $659,200 and retained earnings $877,000. Blossom is considering the following two courses of action: (1) declaring a 5% stock dividend on the 82.400 $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $15 per share. Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Stockholders' equity Paid-in capital Retained earnings Total stockholders equity $ Outstanding shares Before Action $ $ After Stock Dividend $ After Stock Split
A company issues 10,000 shares of its own $10 par value common stock to the public for $19 per share. Later, 1, 000 of these shares are bought for $21 per share as treasury stock. Which of the Losses on the resale of these shares would impact reported net income for the year although gains would not The par value method and the cost method have the same total impact on stockholders equity Because this is a stock transaction, retained earnings cannot be affected by a re - issuance of these shares
The common stock of Blue Inc. is currently selling at $114 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $71 per share. 9.60 million shares are issued and outstanding. Prepare the necessary journal entries assuming the following. (Enter amounts in dollars. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) The board votes a 2-for-1 stock split. (b) The board votes a 100% stock dividend. No. Account Titles and Explanation Debit Credit (a) (b) (To record the declaration) (To record the distribution)
Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Life’s balance sheet: Common stock (800,000 shares authorized; 460,000 shares issued), $4 par, $1,840,000; Paid-in capital in excess of par—common stock, $800,000; and Retained earnings, $31,940,000. The board of directors declared a 2% stock dividend when the market price of the stock was $12 a share. Healthy Life reported no income or loss for the current year. Required: a. Journalize the entries to record (1) the declaration of the dividend, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates. b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity. c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained…

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