Ôn December 31, 2019, the shareholders' equlty section of the balance sheet of R & L Corporation reflected the following: Common shares (no-par value; authorized 60,000 shares; outstanding 25,000 shares) Contributed surplus Retained earnings $250,000 12,000 75,000 On February 1, 2020, the board of directors declared a 12 percent stock dividend to be Issued on April 30, 2020. The market value the shares on February 1, 2020, was $18 per share. Requlred: 1. For comparative purposes, prepare the shareholders' equity section of the balance sheet (a) Immediately before the stock divider and (b) Immediately after the stock dividend. (Amounts to be deducted should be Indicated with a minus sign.)
Ôn December 31, 2019, the shareholders' equlty section of the balance sheet of R & L Corporation reflected the following: Common shares (no-par value; authorized 60,000 shares; outstanding 25,000 shares) Contributed surplus Retained earnings $250,000 12,000 75,000 On February 1, 2020, the board of directors declared a 12 percent stock dividend to be Issued on April 30, 2020. The market value the shares on February 1, 2020, was $18 per share. Requlred: 1. For comparative purposes, prepare the shareholders' equity section of the balance sheet (a) Immediately before the stock divider and (b) Immediately after the stock dividend. (Amounts to be deducted should be Indicated with a minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, 2019, the shareholders' equlty section of the balance sheet of R & L Corporation reflected the following:
Common shares (no-par value; authorized 6e,e00 shares; outstanding 25,e00 shares)
Contributed surplus
Retained earnings
$250,000
12,000
75,000
On February 1, 2020, the board of directors declared a 12 percent stock dividend to be Issued on April 30, 2020. The market value of
the shares on February 1, 2020, was $18 per share.
Required:
1. For comparative purposes, prepare the shareholders' equity section of the balance sheet (a) Immediately before the stock dividend
and (b) Immediately after the stock dividend. (Amounts to be deducted should be Indicated with a minus sign.)
Shareholders' Equity
Before
Stock
Dividend
After
Stock
Dividend
Adjustment
Contributed capital
Total contributed capital
Total shareholders' equity
%24
2. Which of the following statement(s) are true consequent upon the declaration of stock dividend?
Total assets will not change.
Total liabilities will not change.
? Total shareholders' equity will change.
Retained earnings will be reduced by the amount of dividend.
7 Common stock and Additional paid-in capital will not change.
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