Kosmier Company has outstanding 500,000 shares of $50 par value common stock tha

Question

Kosmier Company has outstanding 500,000 shares of $50 par value common stock that originally sold for $60 per share. During the three most recent years, the company carried out the following activities in the order presented: declared and distributed a 10 percent stock dividend, declared and paid a cash dividend of $1 per share, declared and distributed a 2-for-1 stock split, and declared and paid a $0.60 per share cash dividend..

Determine the number of shares of stock outstanding after the four transactions described above.

Number of shares?

Explanation / Answer

500,000 shares After 10% stock dividend, there will be 550,000 shares. (500,000*(1 + .1)) Cash dividend - doesn't change number of shares after 2 for 1 split, there will be 1,100,000 shares (550,000*2) Cash dividend - doesn't change number of shares Number of shares at end = 1,100,000

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