a-1. If the company\'s stock currently sells for $20 per share and a 15 percent
ID: 2461511 • Letter: A
Question
a-1. If the company's stock currently sells for $20 per share and a 15 percent stock dividend is declared, how many new shares will be distributed? (Do not round intermediate calculations.)
a-2. Show the new equity account balances after the stock dividend is paid.
Common Stock ?
Capital Surplus ?
Retained Earnings ?
Total Owner's Equity ?
b-1. If the company declared a 20 percent stock dividend, how many new shares will be distributed? (Do not round intermediate calculations.)
b-2. Show the new equity account balances after the stock dividend is paid. (Do not round intermediate calculations.)
Common Stock ?
Capital Surplus ?
Retained Earnings ?
Total Owners' Equity?
The owners’ equity accounts for Hexagon International are shown here:Explanation / Answer
Hexagon International Details Amt $ No Of Common stock outstanding Common stock ($.60 par value) 45,000 75,000 Capital surplus 365,000 Retained earnings 798,120 Total owners’ equity 1,208,120 a When 15% stock dividend issued; No of new shares issued =75000*15%= 11,250 Fair value of each share = 20 Increase in Par value =11250*0.6 6,750 Increase in Capital Surplus=11250*19.4= 218,250 Reduction in Retained Earning 225,000 New Equity Balances after Stock Dividend Details Amt $ No Of Common stock outstanding Common stock ($.60 par value) 51,750 86,250 Capital surplus 583,250 Retained earnings 573,120 Total owners’ equity 1,208,120 b When 20% stock dividend issued; No of new shares issued =75000*20%= 15,000 Fair value of each share = 20 Increase in Par value =15000*0.6 9,000 Increase in Capital Surplus=15000*19.4= 291,000 Reduction in Retained Earning 300,000 New Equity Balances after Stock Dividend Details Amt $ No Of Common stock outstanding Common stock ($.60 par value) 54,000 90,000 Capital surplus 656,000 Retained earnings 498,120 Total owners’ equity 1,208,120
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