Chapter 10, Problem 10.51BE

(Learning Objectives 2, 3, 4: Measure the effect s of stock issuance, dividends, splits, and treasury-stock transactions) Identify the effects—both the direction and the dollar amount—of these transactions on the total stockholders’ equity of Cad berry Corporation. Each transaction is independent.

1. a. Declaration of cash dividends of $75 million.
2. b. Payment of the cash dividend in (a).
3. c. A 25% stock dividend. Before the dividend, 74 million shares of $1.00 par common stock were outstanding; the market value was $19.18 at the time of the dividend.
4. d. A 40% stock dividend. Before the dividend, 74 million shares of $1.00 par common stock were outstanding; the market value was $18.50 at the time of the dividend.
5. e. Purchase of 1,700 shares of treasury stock (par value $1.00) at $14.25 per share.
6. f. Sale of 900 shares of the treasury stock for $19.00 per share. Cost of the treasury stock was $14.25 per share.
7. g. A 2-for-1 stock split. Prior to the split, 74 million shares of $1.00 par common stock were outstanding.