P12-8. Dividend in shares: Columbia Paper company has the following account of shareholders' equity. The current market price of the company's common stock is $ 30 per share. Preferred stock 100,000 Common Stocks (100,000 shares at $ 2 20,000 par value) Additional paid capital 280,000 Retained earnings 100,000 Total shareholders' equity $ 500,000 a. Show the effects of a 5% stock dividend. b. Show the effects of a stock dividend of: 1) 10% and 2) 20% c. Based on your answers to items a and b, analyze the effects of stock dividends on shareholders' equity. d. Discuss the advantages and disadvantages of each dividend policy described in items ab c.
P12-8. Dividend in shares: Columbia Paper company has the following account of shareholders' equity. The current market price of the company's common stock is $ 30 per share. Preferred stock 100,000 Common Stocks (100,000 shares at $ 2 20,000 par value) Additional paid capital 280,000 Retained earnings 100,000 Total shareholders' equity $ 500,000 a. Show the effects of a 5% stock dividend. b. Show the effects of a stock dividend of: 1) 10% and 2) 20% c. Based on your answers to items a and b, analyze the effects of stock dividends on shareholders' equity. d. Discuss the advantages and disadvantages of each dividend policy described in items ab c.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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