Caswell-Cassey Pharmaceutical has a stockholders’ equity account as shown below. The firm’s common stock currently sells for $20 per share. Preferred Stock $500 Common Stock (2,000,000 shares @ $1 par) 2,000,000 Paid in Capital in excess of par 10,000,000 Retained Earnings 11,600,000 Total Stockholders Equity 24,100,000 Questions (a) What is the maximum dividend per share Caswell-Casey can pay? (Assume capital includes all paid-in capital.) (b) Recast the partial balance sheet (the stockholders’ equity accounts) to show independently (1) a 2 for 1 stock split of the common stock. (2) a cash dividend of $1.50 per share. (3) a stock dividend of 5 percent on the common stock.
Caswell-Cassey Pharmaceutical has a stockholders’ equity account as shown below. The firm’s common stock currently sells for $20 per share. Preferred Stock $500 Common Stock (2,000,000 shares @ $1 par) 2,000,000 Paid in Capital in excess of par 10,000,000 Retained Earnings 11,600,000 Total Stockholders Equity 24,100,000 Questions (a) What is the maximum dividend per share Caswell-Casey can pay? (Assume capital includes all paid-in capital.) (b) Recast the partial balance sheet (the stockholders’ equity accounts) to show independently (1) a 2 for 1 stock split of the common stock. (2) a cash dividend of $1.50 per share. (3) a stock dividend of 5 percent on the common stock.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Caswell-Cassey Pharmaceutical has a stockholders’ equity account as shown below. The firm’s common stock currently sells for $20 per share.
Common Stock (2,000,000 shares @ $1 par) 2,000,000
Paid in Capital in excess of par 10,000,000
Total
Questions
(a) What is the maximum dividend per share Caswell-Casey can pay? (Assume capital includes all paid-in capital.)
(b) Recast the partial
(1) a 2 for 1 stock split of the common stock.
(2) a cash dividend of $1.50 per share.
(3) a stock dividend of 5 percent on the common stock.
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