Cash dividends on the $10 par value common stock of Garrett Company were as follows: 1st quarter of 2019 $ 800,000 2nd quarter of 2019 900,000 3rd quarter of 2019 1,000,000 4th quarter of 2019 1,100,000 The 4th-quarter cash dividend was declared on December 21, 2019, to shareholders of record on December 31, 2019. Payment of the 4th-quarter cash dividend was made on January 18, 2020. In addition, Garrett declared a 5% stock dividend on its $10 par value common stock on December 3, 2019, when there were 300,000 shares issued and outstanding and the market value of the common stock was $20 per share. The shares were issued on December 24, 2019. What was the effect on Garrett’s shareholders’ equity accounts as a result of the preceding transactions? Common Stock Additional Paid-in Capital Retained Earnings a. $0 $0 $3,800,000 dr b. $150,000 cr $0 $3,950,000 dr c. $150,000 cr $150,000 cr $4,100,000 dr d. $300,000 cr $300,000 dr $3,800,000 dr
Cash dividends on the $10 par value common stock of Garrett Company were as follows: 1st quarter of 2019 $ 800,000 2nd quarter of 2019 900,000 3rd quarter of 2019 1,000,000 4th quarter of 2019 1,100,000 The 4th-quarter cash dividend was declared on December 21, 2019, to shareholders of record on December 31, 2019. Payment of the 4th-quarter cash dividend was made on January 18, 2020. In addition, Garrett declared a 5% stock dividend on its $10 par value common stock on December 3, 2019, when there were 300,000 shares issued and outstanding and the market value of the common stock was $20 per share. The shares were issued on December 24, 2019. What was the effect on Garrett’s shareholders’ equity accounts as a result of the preceding transactions? Common Stock Additional Paid-in Capital Retained Earnings a. $0 $0 $3,800,000 dr b. $150,000 cr $0 $3,950,000 dr c. $150,000 cr $150,000 cr $4,100,000 dr d. $300,000 cr $300,000 dr $3,800,000 dr
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cash dividends on the $10 par value common stock of Garrett Company were as follows:
| 1st quarter of 2019 | $ 800,000 |
| 2nd quarter of 2019 | 900,000 |
| 3rd quarter of 2019 | 1,000,000 |
| 4th quarter of 2019 | 1,100,000 |
The 4th-quarter cash dividend was declared on December 21, 2019, to shareholders of record on December 31, 2019. Payment of the 4th-quarter cash dividend was made on January 18, 2020.
In addition, Garrett declared a 5% stock dividend on its $10 par value common stock on December 3, 2019, when there were 300,000 shares issued and outstanding and the market value of the common stock was $20 per share. The shares were issued on December 24, 2019.
What was the effect on Garrett’s shareholders’ equity accounts as a result of the preceding transactions?
| Common Stock | Additional Paid-in Capital | Retained Earnings | |
|---|---|---|---|
| a. | $0 | $0 | $3,800,000 dr |
| b. | $150,000 cr | $0 | $3,950,000 dr |
| c. | $150,000 cr | $150,000 cr | $4,100,000 dr |
| d. | $300,000 cr | $300,000 dr | $3,800,000 dr |
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