Chapter 7, Problem 3QE

Following is the shareholders’ equity section of All-Wood Doors on a day

1. a. Use the financial statement template below to show the financial statement effects of the following dividend events. (Assume that the events are independent.)

(1) Cash dividend declaration and payment of $1 per share

(3) Property dividend declaration and payment of shares representing a short-term investment in Screen Products, Ltd., with a fair value of $10,000

(3) 10% stock dividend

(4) 100% stock dividend

(5) 3-for-1 stock split

(6) 1-for-2 reverse stock split

1. b. Which events changed the book value of common equity? Under what conditions will these events lead to future increases and decreases in ROE?