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retained earnings $400,000. A 10% stock dividend (12,000 shares) is declared when the market price per shar $15. (a) Show the before-and-after effects of the dividend on the components of stockholders' equity. Before Dividend After Dividend %24

retained earnings $400,000. A 10% stock dividend (12,000 shares) is declared when the market price per shar $15. (a) Show the before-and-after effects of the dividend on the components of stockholders' equity. Before Dividend After Dividend %24

FINANCIAL ACCOUNTING
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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### Stockholder's Equity and Stock Dividend Impact The stockholders’ equity section of Ayayai Corp.’s balance sheet is composed of common stock and retained earnings: - **Common Stock ($7 Par):** $840,000 - **Retained Earnings:** $400,000 A 10% stock dividend (equivalent to 12,000 shares) is declared at a market price of $15 per share. #### (a) Impact on Stockholders' Equity Components This section demonstrates the effects of the stock dividend on the various elements of stockholders' equity. The following fields are provided for data entry before and after the dividend declaration: 1. Select from the dropdown options relevant equity components such as: - Common Stock - Additional Paid-in Capital - Retained Earnings 2. Enter the monetary values (in dollars) reflecting the equity components both **Before Dividend** and **After Dividend** for: - **Common Stock** - **Additional Paid-in Capital** - **Retained Earnings** #### (b) Impact on Shares Outstanding In this section, the focus is on the changes in the number of shares outstanding due to the stock dividend: - **Before Dividend:** - Enter the number of shares that were outstanding prior to the dividend declaration. - **After Dividend:** - Enter the adjusted number of shares outstanding post-dividend declaration, factoring in the additional shares distributed (12,000 shares). This structured approach helps in understanding how stock dividends affect both the equity accounts and the shares outstanding within a corporate structure.
Transcribed Image Text:### Stockholder's Equity and Stock Dividend Impact The stockholders’ equity section of Ayayai Corp.’s balance sheet is composed of common stock and retained earnings: - **Common Stock ($7 Par):** $840,000 - **Retained Earnings:** $400,000 A 10% stock dividend (equivalent to 12,000 shares) is declared at a market price of $15 per share. #### (a) Impact on Stockholders' Equity Components This section demonstrates the effects of the stock dividend on the various elements of stockholders' equity. The following fields are provided for data entry before and after the dividend declaration: 1. Select from the dropdown options relevant equity components such as: - Common Stock - Additional Paid-in Capital - Retained Earnings 2. Enter the monetary values (in dollars) reflecting the equity components both **Before Dividend** and **After Dividend** for: - **Common Stock** - **Additional Paid-in Capital** - **Retained Earnings** #### (b) Impact on Shares Outstanding In this section, the focus is on the changes in the number of shares outstanding due to the stock dividend: - **Before Dividend:** - Enter the number of shares that were outstanding prior to the dividend declaration. - **After Dividend:** - Enter the adjusted number of shares outstanding post-dividend declaration, factoring in the additional shares distributed (12,000 shares). This structured approach helps in understanding how stock dividends affect both the equity accounts and the shares outstanding within a corporate structure.
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