Squash Delight Inc. has the following balance sheet: Cash Accounts receivable. Fixed assets Total assets Assets Liabilities Accounts payable Notes payable Common stock (100,000 shares @ $2 par) Capital in excess of par Retained earnings Total liabilities & owners' equity Common stock Capital excess of par Retained earings Total equity $ 65,000 370,000 835,000 $1,270,000 Effect of Stock Split The firm's stock sells for $15 a share. a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) $ 284,000 50,000 200,000 100,000 636,000 $1,270,000 b. Show the effect on the capital accounts of a 10 percent stock dividend. Part bis separate from part a. In part b, do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)
Squash Delight Inc. has the following balance sheet: Cash Accounts receivable. Fixed assets Total assets Assets Liabilities Accounts payable Notes payable Common stock (100,000 shares @ $2 par) Capital in excess of par Retained earnings Total liabilities & owners' equity Common stock Capital excess of par Retained earings Total equity $ 65,000 370,000 835,000 $1,270,000 Effect of Stock Split The firm's stock sells for $15 a share. a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) $ 284,000 50,000 200,000 100,000 636,000 $1,270,000 b. Show the effect on the capital accounts of a 10 percent stock dividend. Part bis separate from part a. In part b, do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:b. Show the effect on the capital accounts of a 10 percent stock dividend. Part bis separate from part a. In part b, do not assume the
stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)
Common stock
Capital excess of par
Retained earnings
Total equity
c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?
1
Effect of Stock
Dividend
O Stock dividend
O Stock split
Transcribed Image Text:Squash Delight Inc. has the following balance sheet:
Cash
Accounts receivable.
Fixed assets
Total assets
Assets
Liabilities
Accounts payable
Notes payable
Common stock (100,000 shares @ $2 par)
Capital in excess of par
Retained earnings
Total liabilities & owners' equity
Common stock
Capital excess of par
Retained earings
Total equity
$
65,000
370,000
835,000
$1,270,000
Effect of Stock
Split
The firm's stock sells for $15 a share.
a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your
answers to the nearest whole dollar.)
$ 284,000
50,000
200,000
100,000
636,000
$1,270,000
b. Show the effect on the capital accounts of a 10 percent stock dividend. Part bis separate from part a. In part b, do not assume the
stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)
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